MREJ September 2023

©2023 Real Estate Publishing Corporation

September 2023 • VOL. 40 No. 3

The office repositioning: A key tool to bringing workers back to downtown and the suburbs

By Dan Rafter, Editor

Minneapolis-based architecture firm NELSON Worldwide has handled more than a dozen office repositioning jobs in the last two years in the Twin Cities. The firm has designed plans that call for everything from adding worker-friendly amenities to skyscrapers to improving the walkabil-

ity and outdoor meeting areas of sprawling office parks.

This repositioning work is important: Employers continue to struggle to bring their workers back to the office. Tools such as high-tech conference rooms, collaborative spaces, rooftop decks, private suites,

on-site fitness centers and cafes serving healthy meals can help convince hesitant employees to take on their morning commutes again, at least on a parttime basis.

And NELSON Worldwide’s work updating office spaces hasn’t been limited to downtown Minneapolis

Nelson to page 20

Preserving the iconic: Restoration work wrapping on Rochester’s glowing beauty of a hotel sign

By Dan Rafter, Editor

Iconic. That’s how Matt Williams, vice president of finance with Red Pine Capital Management, describes the historic neon sign that has so long lit up the nighttime sky from atop the Kahler Grand Hotel in Rochester, Minnesota.

And why not? The sign stands 11 stories above the ground and spells out the name “Kahler Hotel” in towering neon letters. It’s long been a beacon shining in downtown Rochester.

Unfortunately, the sign, built and installed around 1971, had reached the end of its life, sometimes failing to light at all. Age had taken its toll.

But that is changing soon. The historic Kahler sign is now being restored and relit, a major restoration project that will return the sign to its original glory.

And while this project comes with a big price tag, Williams says that there really was no other choice but to bring the iconic sign back to life.

“The sign has been a part of the skyline for over 50 years,” Williams said. “The Grand Hotel is one of the largest buildings in Rochester. I’ve spoken to multiple citizens around Rochester. They all speak fondly of it. They remember the glow of that sign from when they were kids. Now they are full-grown adults and they were sad to see the state it had fallen into these past few years. “

The sign’s metal mesh was rusted beyond repair and the electrical components were so degraded that

1The office repositioning: A key tool to bringing workers back to downtown and the suburbs 1Preserving the iconic: Restoration work wrapping on Rochester’s glowing beauty of a hotel sign.

6 Big-D Midwest celebrates 10 years in Twin Cities market: The commercial real estate industry is a competitive one. Any company that can thrive in this business for a decade or more? It’s doing something right.

6 Employees returning to the office? It’s not happening yet … especially not in the United States: Zoom made headlines in August when the video-conferencing company told employees who live near an office to work from that space at least two days a week.

8 New report: Minneapolis, Chicago rank among busiest co-working hubs in the Midwest: How popular has co-working space become?

10

1.2 million new apartment units: That’s the number of new rentals that opened in the United States during the last three years.

12

Higher rates still haven’t slowed lease demand, rent growth in industrial sector … in Twin Cities and across the Midwest: Vacancies are down and average rents are up.

14

16

The car of the future is here: What it means for the CRE industry.

Data: Why it’s important to become good friends with your data.

18 Mitigate your exposure: Five common risk areas when working with a property manager.

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A nice round number: St. Paul’s Big-D Midwest celebrates 10 years in the region

By Dan Rafter, Editor

The commercial real estate industry is a competitive one. Any company that can thrive in this business for a decade or more? It’s doing something right.

And that includes St. Paul, Minnesota-based Big-D Midwest, a regional office of contracting firm Big-D Companies, which is celebrating a decade of operations in the Midwest.

In its 10th year of operation, Big-D Midwest has surpassed the $1 billion mark in work projects won and has completed more than 5,000 apartment units in the Midwest.

“At the end of the day the goal is to provide a place for people to work, grow their careers and do what they love while providing a high-quality product,” said Cory Schubert, Big-D Midwest’s senior vice president and managing director. “Ten years is a nice round number we’ve hit. We’ve become a big player in this market now. I’m excited to see what the next decade has in store.”

Part of the Big-D Family of Companies, the Big-D Midwest office opened in St. Paul in the summer of 2013. Local construction industry veterans Schubert, Chris Grzybowski and Tom Driscoll had approached the leaders at Big-D Construction’s headquarters in Salt Lake City, Utah, with a vision: Their idea was to bring the Big-D brand to Minnesota, a strong market for general contracting work.

With a focus on community and multifamily structures, Big-D Midwest’s portfolio includes The Gatsby in Downtown Minneapolis; The Reserve at Sono; Aster House Apartments; and The Rowan, several of which were financed by U.S. Department of Housing and Urban Development funds.

Schubert credited much of Big-D’s success in the Midwest to the careful planning that he and his fellow partners engaged in before making the move to St. Paul.

He also pointed to the long history of success that the Big-D brand had already enjoyed. Big-D Midwest was able to build on the procedures that its parent company had already enjoyed success with, Schubert said.

“We came to the market with a list of processes and policies, procedures and safety programs in place,” Schubert

said. “Those processes were already proven before we embarked on this journey.”

At the same time, Big-D Midwest didn’t just jump into the Minneapolis-St. Paul market blindly. The leaders behind the expansion had already forged strong relationships in the market, something that helped Big-D Midwest enjoy quick success once it opened its doors.

“To stay relevant, we have focused on creating a successful culture here,” Schubert said. “The goal is to create repeat clients. When you can create the right culture, that results in repeat clients. A lot of our work comes from repeat clients. That has led to a lot of success in our market.”

After first arriving in the Twin Cities, Big-D Midwest experienced a period of what Schubert calls explosive growth. That’s evident in the numbers: The company started with three people. At its peak, Big-D Midwest employed 54. The company’s leadership eventually decided to slow its growth. The goal, Schubert said, was to grow strategically

Gatsby Apartments in Minneapolis

Cory Schubert

and organically. Explosive growth was not healthy or sustainable, he said.

“We wanted to focus on being better, not just on being bigger,” Schubert said. “We paused our growth and realigned the direction of our company. We took some time to understand what we really wanted to accomplish. That paved the way for the success we experienced during the last five years.”

Among many partners in the market, Big-D Midwest has built an especially strong relationship with developer At Home Apartments. The two firms have collaborated on nine different projects, with more expected to come in the future.

“Our incredible partnership, which also includes Collage Architects, has delivered some of the most unique and desirable apartment communities throughout the Twin Cities,” At Home’s senior leadership, which includes Mike Cashill, Alan Spaudling, Leanna Stefaniak and Tami Wegwerth, said in a joint

statement. “We are proud to call Big-D our partner, and our friend.”

With the bulk of Big-D Midwest’s portfolio in Minnesota, the firm plans to extend its footprint into neighboring states in the coming year.

Why did Big-D Midwest decide to locate in the Twin Cities market? Schubert says it came down to the area’s positive metrics.

The Twin Cities is home to several Fortune 500 firms. Demand for commercial real estate has been strong. Development activity has been consistent. Local government bodies are also known for being friendly to businesses.

This combination makes the Twin Cities a strong market in which to do business, Schubert said.

“We had a book of information, a briefcase, if you will, that we were prepared to present to the chairman of Big-D on why this market was right,” Shubert

said. “The Twin Cities is a strong, growing market. The stars aligned, and this was where we opened.”

Like in all markets, though, the commercial real estate industry in the Twin Cities has experienced a slowdown thanks largely to higher interest rates. That slowdown has hit the multifamily sector here, too, a sector that has been strong for a long time.

The higher interest rates, though, have slowed the number of multifamily sale transactions taking place throughout the region.

“The third and fourth quarters of this year will be a little bumpy given the state of the market and high interest rates,” Schubert said.

The good news? The demand for new apartment buildings remains strong. To Schubert, this means that new product will inevitably be built here, and that construction activity will pick up once the Fed stops raising interest rates.

Just look at the apartment vacancy rate throughout the Twin Cities market. It remains low, making it difficult for renters to find units, especially modern apartment units in urban locations.

“Our multifamily vacancy rate remains one of the lowest in the country,” Schubert said. “With the higher interest rates, it makes it more difficult for some of the new apartment buildings to pencil out. But we still have that demand for new apartment space with our high occupancy rates.”

Multifamily developers are also dealing with higher construction costs. Fortunately, Schubert said, the costs of some materials are finally beginning to dip.

“It’s not enough to put us back to 2021 construction costs, but there has been some downward movement,” Schubert said. “Still, things are working against one another. If you have the costs of earthworks, framing and drywall stabilizing, you might still have mechanical and electrical increases that are offsetting those costs that are decreasing.”

The Reserve at Sono Apartments in Vadnais Heights, Minnesota.

Ascend at Woodbury in Woodbury, Minnesota.

Employees returning to the office? It’s not happening yet … especially not in the United States

By Dan Rafter, Editor

Zoom made headlines in August when the video-conferencing company told employees who live near an office to work from that space at least two days a week.

And Zoom isn’t the only big company that is mandating or strongly recommending that its employees return to the office. But are these orders actually bringing workers back to their cubicles, conference rooms and collaboration spaces? Not really, according to a newly released study.

According to the second-quarter 2023 Workplace Utilization Index from XY Sense, office space around the globe was used just 30% of the time during the second quarter of this year.

This shouldn’t be too surprising to anyone watching the Minneapolis-St. Paul office sector: Vacancies remain high here, and the majority of office employees are still working from home at least part of the time.

And Alex Birch, founder of XY Sense, told Minnesota Real Estate Journal that this 30% figure might be the sign of a longer-lasting new normal in the office sector.

“This year we didn’t have any major COVID impediments where we saw new lockdowns,” Birch said. “Given that this is the first year of no new COVID developments and no new influence from COVID, are we starting to see what is a new normal in the office sector? Is this the effect of large enterprise companies dealing with long-term office leases?”

As Birch said, many of the biggest companies are locked into long-term office leases. They can’t move as easily to new, smaller space. Because of that, there’s plenty of office space around the globe that is simply not being used most of the time.

And that indicates what might be a long recovery for the office sector.

Consider the numbers from XY Sense’s second-quarter report, which aggregates data from 24,885 workspaces across the United States; the Europe, Middle East and Africa geographical grouping; and the Asia-Pacific region. This data comes from XY Sense’s network of sensors installed in client workspaces, sensors that passively monitor office areas to collect real-time insights. XY Sense says that office-utilization numbers are updated every two seconds.

According to the Workplace Utilization Index, levels of workplace utilization have plateaued at about half pre-pandemic levels. Days of the week matter, too. The index found that office utilization numbers are 84% higher on Tuesdays, Wednesdays and Thursdays than they are on Mondays and Fridays.

The report found that office usage was highest on Tuesdays at 38.2%, and lowest on Fridays at 18.2%.

What’s interesting is that U.S. office-usage rates were the lowest of all the countries tracked in XY

Sense’s report. The report found that U.S. office space was used just 20% of the time during the second quarter of this year. That’s lower than the 35% usage rate recorded in the Asia-Pacific region and far lower than the 52% usage rate seen in the United Kingdom. The United Kingdom’s office-utilization rate was the highest in XY Sense’s second-quarter report.

Birch pointed to several possible reasons for the lower office-utilization rate in the United States.

Home sizes are larger here, which makes it possible for more workers to work comfortably from home offices. As Birch says, it’s the opposite of what many workers in Japan face. He points to a remote call XY Sense had with a client in Japan. That client

had to take the call in a closet as it was the best available private space in the client’s home.

Commute times matter, too, Birch said. Many workers moved even further from their offices during the pandemic. That’s another incentive for these workers to remain in their home offices.

Technology has improved, too. Birch said that tech is good enough today so that many office workers can do their jobs completely from home.

And one other factor? The independence of U.S. workers. “People in the United States don’t like to be told what to do,” Birch said.

That last factor might be an important one. As Birch says, it’s one thing for companies to mandate that workers return to the office, at least on a parttime basis. But it’s another for these companies to enforce these mandates.

“There’s a gap and a disconnect between what companies are saying and what they are actually doing,” Birch said. “They’re not always enforcing these mandates. And if they aren’t, then many employees simply aren’t listening to them.”

That doesn’t bode well for a return to pre-pandemic levels of office usage anytime soon.

“While individual companies may see increases in office attendance and utilization, it’s clear that most businesses won’t see a return to pre-pandemic office utilization levels in the foreseeable future,” said XY Sense head of customer success Shivaun Ryan, author of the report. “We’ve reached a new normal. The question is how workplace leaders are going to adapt their office portfolios to meet this new status quo.”

XY Sense’s report also revealed changes in workers’ activities while they are in the office. In the first

Alex Birch

New report: Minneapolis, Chicago rank among busiest co-working hubs in the Midwest

By Dan Rafter, Editor

How popular has co-working space become?

A new report from CoworkingCafe says that more than 5,600 co-working spaces are spread across the United States.

According to CoworkingCafe’s March State of the Industry Report, there were 5,612 co-working spaces in the United States as of March of 2023.

Many of these spaces are in the Midwest, with several cities in the region boasting plenty of co-working options. CoworkingCafe said that the Minneapolis-St. Paul market had 74 co-working spaces totaling 1.39 million square feet.

Workers in Kansas City can choose from 52 co-working spaces totaling 1.37 million square feet, while those in Nashville can work from 68 co-working spaces totaling 1.42 million square feet.

Chicago, not surprisingly, boasts the greatest number of co-working spaces in the Midwest with 235 as of March of 2023. Chicago also had the greatest amount of square feet of co-working space with 6.24 million. Chicago is one of five markets in the United States with more than 200 co-working spaces, joining Manhattan, Los Angeles, Washington, D.C. and Fort Worth, Texas.

The popularity of co-working spaces in Chicago isn’t a shock. CBRE reported that the office vacancy rate in the Chicago market hit a high 21.4% at the end of 2022. At the same time, those companies that are looking for new office space here are searching for higher-quality spaces with modern amenities. CoworkingCafe says that co-working spaces are well-suited to take advantage of this: Many have been built more recently, so they often feature the more modern amenities that workers and companies are seeking today.

Across the country, U.S. co-working space stock added up to more than 113.74 million square feet, according to CoworkingCafe. That accounted for 1.67% of the total office space in the nation.

This number has grown significantly since 2010, when JLL reported about 12 million square feet in flexible workspaces across the United States. As CoworkingCafe says, that increase translates to a tenfold growth of this sector in the past 12 years.

Doug Ressler, business intelligence manager at Yardi Matrix, said that the growth in co-working spaces should only continue in the coming years.

“Many companies still aren’t certain the number of employees who will be in their physical office space in the near- or long-term. That has led to firms doing smaller projects with startups, like pilot tests, instead of larger-scale purchases,” Ressler said.

How much does it cost to rent space in this sector?

CoworkingCafe reported that the national median rates for open co-working were $134 a month, while dedicated desks went for $326 and virtual offices for $94.

Of course, not all markets are equally expensive. Manhattan and San Francisco boasted rates that were often twice as high as the national median. In Manhattan, the median price for an open workspace was $300 per month in March, more than double the national rate. On the opposite coast, the median price for the same subscription type in San Francisco was $357, or more than $200 above the national median for this type of arrangement.

quarter of this year, XY Sense reported a 24% utilization rate for collaboration spaces compared to a lower 18% workplace utilization rate for individual workpoints such as workers’ desks or cubicles.

That changed in the second quarter when the utilization rates for individual spaces increased by 67%. According to XY Sense, this indicates that workers are performing a more balanced blend of individual and group work than they were at the beginning of the return-to-office movement. Back then, workers spent most of their in-office time participating in group discussions and meetings.

How are companies trying to get their employees to return to the office? Birch says that companies are trying everything from official mandates to perks that make coming into the office more enjoyable.

He points to the amount of free food that some companies are offering to their workers. Then there is the move to higher-quality office space. Those companies that can afford to move, and have approached the end of their leases, often move to higher-quality space as a way to entice workers to come into the office at least two or three days a week, Birch said.

This trend is having an impact on the commercial office sector. When companies move to higher-quality space, they are often leasing less of it. That makes financial sense: By leasing less space, companies can afford the higher costs of the

CoworkingCafe identified five primary providers of co-working space in the country. Regus led the way with 924 spaces, while WeWork ranked second with 240. Industrious pulled up in third place with 135 nationwide locations, while Spaces ranked fourth with 123. Premier Workspaces came in fourth place with 88 spaces.

higher-quality spaces they are leasing. But that does leave a lot of unused office space across the globe.

The trend is especially troubling to Class-B and Class-C office space that lacks the modern amenities and collaborative spaces that today’s tenants seek.

“Companies are experimenting with a variety of approaches to bring workers back,” Birch said. “They want their employees to come in and connect with each other, even if it is for a shorter amount of time. The general sentiment is that companies want people to come back more often so that they can collaborate and be able to understand each other’s missions and values. All different forms of experimentation have happened to try to make this a reality.”

Despite the sluggish return to the office, Birch does predict that the 30% utilization figure will increase over time, even if that increases takes longer than anyone predicted during the height of the COVID pandemic.

“That 30% number has to change,” Birch said. “It just will change more slowly than organizations would like. With the duration of office leases and the time it takes for companies to downsize and find new space, it will take time. We will see the utilization percentage increase. But it will be a gradual increase.”

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1.2 million new apartment units: That’s the number of new rentals that opened in the United States during the last three years

By Dan Rafter, Editor

Construction crews brought 1.2 million new apartment units to the market during the last three years, a record for any three-year period. And 2023? That will go down as another busy year, with developers expected to open 460,860 new apartment units by the end of December.

That is the good news from the annual apartment construction report released in late August by RentCafe.

According to RentCafe, the number of new apartment deliveries is expected to remain high until 2025, when the impact of the United States’ current economic challenges will finally slow new construction in the multifamily space.

And the last three years? RentCafe says that the United Stats has benefited from a multifamily construction boom not seen since the 1970s. The country is expected to see another 1 million new rentals through 2025.

Doug Ressler, manager of business intelligence at Yardi Matrix -- the company that provided the data for RentCafe’s report -- said that new households grew quickly after the pandemic as young adults moved out of their parents’ homes.

The work-from-home movement also prompted renters to form their own households to gain more living space for their offices, children and pets, Ressler said.

The challenge for renters? Almost two-thirds of the apartments built during the pandemic boom are clustered in just 20 high-growth metropolitan areas that account for about 41% of the total renter population in the United States.

This means that in much of the country, the new supply of apartments barely made a dent in the demand for new rental units.

At the same time, about 89% of the apartments completed during the last three years are high-end and expensive, targeting upper-middle-class and high-income renters. This makes it challenging for renters looking for affordable units.

The Dallas metropolitan area -- which includes the city and its surrounding suburbs -- has seen the most new apartment units built since 2020, with New York and Houston coming in second and third place.

On a purely city level, Austin has had the most apartments built in the last three years, followed closely by Houston.

Don’t, though, expect the apartment construction boom to continue indefinitely. RentCafe says that the growth in new rentals will slow after the current round of projects is completed thanks to the economic uncertainties currently hitting the country.

“The tightening of bank lending standards, combined with rising costs of construction materials, labor and land, has made mew projects harder to pencil,” Ressler said.

Ressler said that construction debt today is starting at 8% interest. Most banks only lend 60% or less of the total cost of a project. Ressler added that junior construction debt is even more expensive, with interest rates in the mid-teens.

“This financing structure can make it challenging for companies to initiate new construction projects unless they already have a substantial amount of capital on hand,” Ressler said.

Because of this, RentCafe predicts that the number of new apartments will drop from 484,000 in 2024 to 408,000 in 2025. New completions are expected to hit a low point in 2026 with about 400,000 new units added.

Yardi Matrix estimates then indicate that the pace of multifamily construction will gradually recover in 2027 and 2028.

What’s happening in the Midwest? According to RentCafe, Chicago is expected to add 6,159 new apartment units in 2023. For comparison, New York City is expected to add a far more robust 33,001 new multifamily units while Dallas is expected to add 23,659.

Nashville is expected to add 8,977 new apartment units in 2023, leading the Midwest. Activity is expected to be solid in Minneapolis-St. Paul, too, with RentCafe predicting that the Twin Cities will add 6,607 new apartment units this year.

Chicago ranks as the 20th busiest metro area for apartment growth in 2023, while the Twin Cities area ranks 19th. Nashville came in 15th, the highest-ranking of any Midwest market.

In Texas, the Dallas metropolitan area claimed the second spot in RentCafe’s ranking of the business 20 U.S. metro areas for new apartments in 2023. Austin came in third while Houston ranked eighth. Not surprisingly, the New York City metropolitan area topped RentCafe’s list.

Between 2020 and 2022, Chicago saw 15,356 new apartment units built, ranking 10th among the top 20 cities tracked by RentCafe. Nashville saw 12,085; Columbus, Ohio, 9,944; and Minneapolis 9,569.

In Texas, Austin led the way with 29,115 new apartment units added between 2020 and 2022. Next came Houston, with 28,423; San Antonio, with 15,651; Dallas with 13,741; and Fort Worth with 9,672.

Higher rates still haven’t slowed lease demand, rent growth in industrial sector … in Twin Cities and across the Midwest

By Dan Rafter, Editor

Vacancies are down and average rents are up. Just more evidence that industrial real estate remains the most resilient commercial sector in the United States.

According to the August national industrial report from CommercialEdge, industrial in-place rents averaged $7.39 a square foot in July. CommercialEdge reports that this is up 7.5% from a year earlier.

At the same time, the national vacancy rate for the U.S. industrial sector fell to 4.4%. That’s down 10 basis points on a month-over-month basis.

And in the Twin Cities region? It’s one of several across the Midwest that is showing resiliency in the face of economic uncertainty.

Industrial resilient even when facing higher interest rates

This is notable in part because of how hard the country’s higher interest rates have hit so much of the rest of commercial real estate’s asset types.

The Federal Reserve’s fight against inflation has led to multiple interest rate hikes during the last 18 months. The industrial sector has remained resilient to these hikes when it comes to vacancies and rents.

However, this doesn’t mean that higher rates haven’t had some negative impact. CommercialEdge reports that as capital has become harder to find and more expensive, industrial construction starts and sales have slowed.

After 586.2 million square feet of industrial space broke ground in 2021 and 614.5 million square feet last year, developers started construction on only 177.8 million square feet in 2023. Add the increased cost of construction financing, and many developers are pausing projects.

The U.S. industrial sales volume was $98.5 billion in 2022 and $128.2 billion in 2021, but this year, industrial deal totaled only $27 billion through the end of July.

At the same time, the national average sale price has increased slightly from $124 per square foot in 2022 to $131 per square foot in 2023. Some of the slowdown in sales may be due to a bid-ask gap between buyers and sellers.

Given strong rent growth and low vacancies, owners are comfortable holding properties. Meanwhile, buyers may be hesitant to pay historically high figures when capital is expensive.

Even within a tight interest-rate environment, industrial is performing better than other asset classes, and long-term demand drivers remain positive. The reshoring and nearshoring of manufacturing continue to pick up steam. Although e-commerce cooled in the quarters coming out of the pandemic, the gains that were made have become entrenched. Hanging tough in the Twin Cities, most of the Midwest

Some Midwest industrial markets are performing especially well. In Nashville, the vacancy rate stood

at 2% in July, where the average rent was $5.59 a square foot, up 6.6% from the previous year.

In Detroit, the vacancy rate was 3.4% in July while average rents jumped 5.5% to $6.76 a square foot. In Columbus, the average rent increased 4.7% yearover-year while hitting $4.43 a square foot. The vacancy rate here was a low 3.1%.

The Minneapolis-St. Paul industrial sector was strong, too, with the vacancy rate at 6.2% and average rents jumping 4.3% from last year to $6.53 in July.

Cincinnati saw an average rent of $4.64 a square foot, up 4.3% from a year earlier, and a vacancy rate of 4.6%. In Memphis, the vacancy rate was 5.4% in July and average rents were up 4% to $3.67 a square foot.

How are industrial sales holding up throughout the Midwest? These are down, thanks, of course, to higher interest rates. This doesn’t mean, though, that sales aren’t happening.

The Chicago market, for instance, saw $983 million in industrial sales in 2023 up through July. The Twin Cities area ranked second in the Midwest with $551 million worth of industrial sales.

In Cincinnati, that figure stood at $508 million, while it sat at $380 million in Detroit and $336 million in Columbus.

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The car of the future is here: What it means for the CRE industry

by Tom Halek, J. Becher & Associates

The car of the future is already here. In 2022, U.S. battery electric vehicle (BEV) sales increase 65% compared to 2021. In the fourth quarter of 2022 alone, BEV sales were 72% higher than in the fourth quarter of 2021. This rate is projected to grow 25% annually over the next five years.

Minnesota had 28,784 BEVs at the end of 2022. This is a 311% increase from 2018 when there were 7,000 EVs in the state. Additionally, the State of Minnesota has a goal to grow the number of EVs to 200,000 by 2030.

This growth in EV sales has led to an increased need for electric vehicle charging stations, which can now be found in a variety of locations, including convenience stores, truck travel centers, retail centers, restaurants, mixed-use developments, workplaces, hotels and multifamily dwellings. Minnesota currently has 3,212 public charging stations.

Increasing demand for EV charging stations

Most EV owners — 80% — charge their vehicles at home. Of those, 40% live in multifamily properties. It has become a necessity for multifamily communities to provide EV charging stations as EV owners check on the availability of charging stations before selecting a property. If a multifamily property does not provide them, EV owners are compelled to search for one that does – a lost opportunity.

Multifamily properties need to provide EV chargers to attract and retain residents. In fact, 58% of renters are willing to pay more to live in a community offering EV charging. EV chargers help set the property apart from multifamily communities that don’t offer this amenity and can also be an incremental revenue stream.

EV charging stations can be a revenue generator for retail establishments. Studies show that when drivers charge their cars in a retail setting, 89% will make a purchase.

Publicly available EV chargers appear on a national map so commuters can locate them easily. Stores and restaurants that offer EV charging stations may attract new customers who want to charge their cars. Additionally, multifamily residents may choose to remain in their current apartment for a greater period if this amenity is available.

Companies that get ahead of the demand for EV charging stations will add value to their property and gain an edge over their competition.

Achieving sustainability goals

EV charging stations help property owners achieve their sustainability goals for carbon reductions, which is an important consideration for customers and residents. Most EV charging stations are connected to a network that provides a reporting dashboard, which calculates the amount

of CO2 reductions generated during charging. These stats can be used in the reporting required for a business’s sustainability goals and for future cap-and-trade carbon credit capture and further monetization.

Choosing the right EV charging station

There are four types of EV charging stations — AC Level 1, which takes 12-40 hours for a full charge; AC Level 2, 3-10 hours; and DC Fast Charger, 15-45 to charge.

The DC Fast charging stations are most likely to be found along transportation corridors, such as at rest stations or truck stops. The most common charging station for commercial properties are AC Level 2 chargers. In multifamily communities, AC

Level 2 chargers allow residents to get a full charge overnight.

J. Becher & Associates, a locally owned and operated electrical contractor, installs EV chargers at a variety of properties. The company has installed Level 2 and DC Fast Charging stations, which require experience and training. They hold the premiere Electric Vehicle Infrastructure Training Program (EVITP) certification, and they are certified installers for many of the charging station manufacturers.

J. Becher & Associates takes clients through a seven-part engagement process that includes initial discovery, identifying the availability of government or utility incentives, site consultation, identifying a product and network service partner, proposal development, construction and finally, close out activities.

J. Becher & Associates has reseller agreements with some of the top EV charger manufacturers and supports clients’ warranty and maintenance needs after installation.

It’s important for commercial and multifamily properties to find an EV partner who will invest time in their business and ask questions to be able to match a solution to their true business needs today, while building a roadmap for the client that supports their future EV charging investments.

To learn more, contact Tom Halek at thalek@jbecher.com or call him at 763-232-2388.

Tom Halek is EV charging business development leader for Rogers, Minnesota-based J. Becher & Associates.

Tom Halek

Why it’s important to become good friends with your data

By William Lively

All fund and real estate investors have data that they may not be utilizing because it seems cumbersome and overwhelming. Even the phrase “big data” may seem daunting.

However, big data simply means taking large volumes of data and applying computer analysis to identify patterns and trends. For example, data can be used to document occupancy, overhead and maintenance costs, and track how many employees a company needs.

Big data can effectively help guide investment decisions, and with the right tools -- including artificial intelligence (AI) and machine learning (ML) -- turning data-driven, decision-making into an investment strategy can be quick and efficient.

Time to take action is now

With so much uncertainty and volatility in the capital markets today, owners are focusing on what they can control, and that includes the fundamentals that drive performance.

Investing in technology, specifically related to data, is key so the front office is more informed and can make better decisions in a very competitive environment. The only way to really do that is to look inward and focus on data and assets and determine what you can improve. After all, investors are evaluating different funds based on how they operate internally and the fundamentals that drive their performance.

Three things to know about the role of big data in your investments

1. Have accurate KPIs (key performance indicators)

Paying close attention to KPIs means investors can take data and drill down to very specific, actionable pieces of information, which are typically left to analysts, and, therefore, human error.

For example, investors can dig down as specific as revenue per occupied room, which requires big data to determine that number on a monthly, quarterly and yearly basis.

In an EXtrance pilot implementation during COVID-19, a hospitality fund needed to assess the real-time effects of deploying different operational strategies during the slow reopening, including whether investments in marketing translated into improvements in overall average occupancy and the resulting impact on staffing costs.

The operator also needed to know if the hotels would generate more than average F&B spend per guest because of the restaurant closures. These nuances in the data showed the effects of different operational strategies across all the KPIs using machine learning that the neural network was tracking. This allowed the operator to be smart with its cash and strategize for better overall outcomes in an extremely unprecedented and unpredictable time.

2. Take larger market data and simulate future scenarios

Using data allows investors to create a hypothetical staging environment where they can add an asset to their portfolio, for example, and see the

William Lively

impact it would have on cap rates and the need for future full-time employees. As we were developing the EXtrance platform, our networks were able to simulate an acquisition, with different types of capital structures, and see the impact of all relevant KPIs and the overall fund strategy utilizing a sandbox environment with massive amounts of historical data.

A fund manager may ask: “In two years, based on how the market has performed over the last 25 years, what’s a realistic picture of how this asset will appear on the books? And how will it affect our long-term vision for our fund?”

Without complex data analysis, most of these acquisitions are done on “gut-feeling” and with a quick review of simple data that doesn’t consider how one data set impacts the other data sets. By leveraging

these tools, funds begin to develop a competitive advantage over one another.

3. Track performance of investments over long periods of time

Investors can gain new insight by taking 10 years of single property data and drilling down into futuristic types of projections. They can look at some strategies that worked for the property and some that didn’t. This is done by taking large sets of data, such as for family offices, which may hold an asset for 10 or 20 years. They can look at a property’s operational data including energy usage and staffing and use the data across the portfolio to see if they need to adjust strategies.

What data can tell you that you might be missing

Anomaly detection

Owners/investors can use AI and ML to find patterns in the data and define acceptable numeric values in which the data should fall. Knowing where the data should fall and being able to easily detect even the smallest anomalies gives better insight into the data and detects things that would normally be missed.

For example:

• If an investor or owner is looking at data over a 10-year period, the AI and ML system is predicting what those values should be – from food and beverage expense to room expense to any type of expense or profit that has historically been earmarked.

• Or after acquiring a new asset, administrative costs may gradually impact overall return. Our anomaly detection network uncovered that a single asset fell outside of expected administrative ex-

Judy Ring

Xcel Energy

Duane Poppe Lee & Associates

Mark Anderson Sambatek

Peter Mork Capital Partners

Will Sharpe WPT Capital Advisors

Chris Eng Washington County CDA

Eric Van Oss City of Rosemont

Nancy Hoffman Chisago City

Todd Mohagen Mohagen Hansen Architecture | Interiors

Gregory Frahm-Gilles

Anoka County Regional Economic Development

Connor McCarthy United Properties

Jeremy Thomas RJ Ryan

Ra’eesa Motala Evoke Partners

Mark Kolsrud Colliers

Scott Tankenoff Hillcrest Development LLLP

Deanna Kuennen City of Farmington

Judd Welliver CBRE

Nate Erickson Transwestern

Steve Hoyt

Hoyt Properties

Steven Buss Likewise Partners

TOPICS & AGENDA

Mitigate your exposure: five common risk areas when working with a property manager

By: Colleen Wevodau and Dylan Talbot

With your time at a premium and your money on the line, minimizing risk should be any real estate owner or investor’s top priority. Hiring reputable property management companies can help protect those interests, but working with any third-party vendor has inherent risks. Here, we’ve outlined five common scenarios in which we see risk exposed. By proactively protecting yourself in these areas, you can rely on the property manager’s accurate financial inputs to help maximize revenue opportunities and avoid fraud, errors or surprise write-offs.

1. Financial reporting

One of the keys to success for a real estate company is having complete and accurate financial reporting. Inaccuracies or missing items in the financial reports should set off alarms. Real estate owners oftentimes trust their property management companies to handle financial reporting – and that’s okay – but owners should always review the financials, or have a certified public accountant do so, because errors and omissions can often be indicators of a larger problem.

2. Unanticipated expenses and/or significant reimbursements

Third-party agreements often allow for significant reimbursement of expenditures incurred by prop-

erty management companies and their employees. From construction fees to day-to-day costs such as tenant retention expenses, it can be difficult to ensure the validity of all of these payments and ensure they are in accordance with agreements. This is particularly true when real estate owners have multiple properties across different regions. Often, owners do not look at the individual expenses, making it easy for employees to expense personal items or non-essential goods.

3. High turnover rates among personnel

A lack of consistent staffing often indicates possible issues that go deeper than what is visible on the surface. These issues can range from poor communication and collaboration to more serious situations such as fraud. For example, a property management company that experiences high turnover could indicate an even larger issue if the organization doesn’t have well-documented and well-enforced internal control procedures.

4. Documented internal control procedures

Well-documented internal control procedures are a necessity for any company. Organizations should have a clear outline of who performs each task, who approves each key decision and who reviews the overall process. There needs to be a distinct segregation of duties and preferred processes and

procedures to ensure consistency and accurate record-keeping.

5. Lack of sufficient third-party oversight

Many real estate investments do not require an audit by a third-party public accounting firm. However, regardless of the requirements you are facing, having third-party oversight is generally a good idea for the level of protection and comfort it provides, even if the review is just a high-level overview of your property management company’s policies and procedures.

There isn’t a one-size-fits-all approach when it comes to third-party risk management, but establishing a framework and efficient processes suitable for your organization is critical. Procedures designed to avoid future risk combined with a thorough review of your existing property managers’ accounting policies and internal control procedures can reinforce high-quality reporting and service delivery. Baker Tilly can help you do both.

Visit bakertilly.com

Iconic from page 1

the slightest drip of moisture would cause the lights to malfunction.

Recognizing the sign’s historical significance to the city of Rochester, Kahler Hospitality Group made the decision that restoring it, despite an estimated cost of $500,000, was the best path forward. This undertaking marks the first renovation to the Kahler sign since the 1980s.

Williams said that the Kahler Hospitality Group had several choices. The group could have taken down the neon sign and replaced it with a standard hotel sign.

“You would have saved hundreds and hundreds of thousands of dollars doing that,” Williams said.

“But ultimately, the group recognized the importance of the sign to the city. It was decided to return the sign to its former glory.”

The biggest change? The letters will now be lit by LED lights instead of neon, bringing the sign into the 21st Century.

“The building is visible from the Mayo Clinic,” Williams said. “The people on the upper floors of the clinic can see that sign every day. There is something to be said for preserving what history we can from this building.”

Not an easy job

Because the sign stood 11 stories above the ground and partially hangs over the side of the Kahler Grand Hotel, gaining access to the iconic feature was no easy task.

But starting this October, when the renovation work is completed and the sign’s letters glow again, the restored sign will once again takes its place as one of the most beloved components of the downtown Rochester skyline.

“The Kahler sign holds a significant place in Rochester’s history,” said Javon Bea, board representative for the Kahler Hospitality Group. “As a company, we felt a sense of duty to rejuvenate the sign, not just as a tribute to the city’s storied history but also as an outward reflection of the extensive renovations we’ve undertaken within the Kahler Grand Hotel itself.”

Construction crews took the neon letters down in April. Behind the scenes, the hotel’s operator ordered the fabrication of the sign’s new LED letters. Crews were ready to put the new letters up in the first half of September.

The goal is to have all the letters back in place and the sign ready to go in October, Williams said.

“Covid was a tough time for the hospitality business,” Williams said. “Unfortunately, those maintenance items needed to wait while we focused on operating the hotel. Now coming out of that period,

with COVID mostly behind us and Rochester back on its feet, the hospitality business is doing well again. We felt it was time to make a decision on the sign.”

This isn’t the only work that Kahler Hospitality has done on the 600-room hotel. Construction crews recently finished a four-year project that stands as one of the most extensive renovations of the historic hotel since it was first constructed in 1921.

Like many older, historic hotels, the Kahler Grand featured rooms that were considered small by today’s hospitality standards. Much of the renovation work, then, went toward improving the hotel’s guestrooms.

“The renovations balanced the history of the hotel with the need to bring the amenities and space that people expect in modern society,” Williams said. “Once you start taking down the walls in a 100-yearold building, you do find surprises. But ultimately, the work went well. The architects and everybody involved in the project did a great job staying true to the history of the hotel while still providing a modern experience to our guests.”

The Kahler Hospitality Group also plans to unveil a Kahler History Museum in the hotel’s lobby, featuring one of the original letters from the 1970s sign.

Nelson

from page 1

or St. Paul. The architecture firm is also repositioning outdated office buildings in the suburbs. Recent projects include the Crest Ridge office building in Minnetonka, Minnesota, which NELSON Worldwide helped convert from a single- to a multi-tenant building, and Golden Hills, an office development in Golden Valley, Minnesota, that was transformed from a Class-B property to Class-A.

John “Ozzie” Nelson Jr., chief executive officer of NELSON Worldwide, said that both recent suburban projects focused on reducing office footprints in favor of adding a large amount of shared office space.

That makes sense: Tenants today want communal areas in which to host client meetings, grab lunch with colleagues, brainstorm new ideas or work outside of a traditional cubicle or office.

Nelson said that companies eager to get their employees back in the office need to offer these workers a reason to leave their home offices, at least two to three days a week. The owners of office buildings can help by embracing creative redesigns of the properties that they own.

“There are a lot of peripheral factors at work here,” Nelson said. “The CEO might believe that everyone should be back at work. Cities might be putting pressure on CEOs to get people back because of the economic impact having office workers back downtown can have. I get all that. But it’s important for people to understand that the ability to work hybrid and virtual has been a reality for 10 years. We just needed a crisis to embrace it. There is no

putting the genie back in the bottle. Now it’s about what do we do to move forward with the new office environment?”

One way to move forward? Building owners need to offer amenities that make it worthwhile for employees to return to the office. That means adding those communal workspaces, outdoor spaces and wellness-focused perks like restaurants that serve salads, wraps and other healthy meals and fitness centers that might offer personalized classes or onsite yoga sessions.

It might also mean putting in the work to turn a Class-B office building into a Class-A facility, Nelson said. That might be expensive, but it could pay off in the long term.

“No two office buildings are the same,” Nelson said. “You need to look at your particular asset. It is an ‘A,’ ‘B’ or ‘C’ building? Is it in the city or suburbs? Then you need to look at your own situation in terms of vacancies. What do you think your vacancy rate will be in three years?”

As Nelson says, the owners of Class-A office buildings that are 100% filled might not worry about adding new amenities. The owners of Class-B buildings might take the steps to boost their property to a Class-A structure if their vacancies are increasing.

Those who own Class-B buildings in a market saturated with Class-A office spaces might not want to invest to upgrade their properties to the next level, Nelson said. They might do better trying to attract those tenants who want to locate in their community but would rather spend for Class-B rent than pay more for Class-A space.

An example of the work that NELSON Worldwide has done in Minneapolis can be found at the AT&T Tower, the 464-foot-tall skyscraper at the corner of Marquette Avenue and 9th Street South.

Nelson describes the revamped entryway of this space as a type of welcome center: There is retail there, something that is enticing for workers. NELSON Worldwide designed collaborative workspaces, too, and lightened the color scheme. The interiors of the tower, which was built in 1991, are now friendlier and more welcoming.

“AT&T Tower was this classic, imposing tower,” Nelson said. “You can have the best office space in the world, but if people are walking into a building that feels like a 1990s office space, they are going to be turned off.”

NELSON Worldwide also planned the repurposing of Two22, a 41-floor office tower in downtown

Nelson to next page

John Ozzie Nelson

NELSON Worldwide designed new interior spaces at Minneapolis’ Two22 office building to help it compete with neighboring properties

Minneapolis. The redesign of the space features an abundance of natural light and a two-story tenant lounge that includes a training room that can hold more than 90 people. The redesign also boasts a rooftop deck, grand central staircase and high-tech conference center.

It’s why office owners and developers are embracing a hospitality feel for their office spaces. They want to create a buzz and excitement in the common areas of their buildings, offering some of the same amenities that you might find in a high-end hotel.

“That is the biggest thing that we are trying to create, vitality and the feel of traffic,” Nelson said. Offering services is essential, too, Nelson said. Tenants that are located in office buildings that can offer concierge services, dry cleaning or any of the activities that people would normally do while at home will gain an edge when trying to persuade workers to come back to the office.

Those that offer fitness centers will gain an advantage, too. Workers will be more likely to come into the office if they know they can get in a workout before heading home.

Outdoor spaces matter, too, Nelson said. Workers want the chance to visit walking paths surrounding their offices, take phone calls from rooftop decks or type into their computers while breathing in fresh air. And in cities in which the temperatures can dip severely? Glassed-in spaces that give the illusion of being outdoors are key amenities, too.

“It’s about how you can make the office experience purposeful,” Nelson said. “At one time, people sat at their desks for eight hours a day. That has changed. People now have different expectations. By offering different experiences in the office, owners can better attract tenants, who will then have more tools that they can use to bring their workers back to the office.”

As Nelson says, the flight to quality in the office sector is very real. He estimates that 75% of the office moves today are companies downsizing to smaller but higher-quality space that gives their employees a reason to come into the office.

When deciding what to add to an office building, owners need to look at the amenities and features that their spaces lack and analyze whether their absence is boosting vacancies.

“Owners have to look in the mirror,” Nelson said. “What is the inventory of office space in your mar-

penditure for its size and value due to a creeping pricing structure by that asset’s accounting firm. That expense was quickly renegotiated.

• Investors can use data to track the capital structure, debt draws, capital calls, and distributions, and determine how that impacts the portfolio’s financial outlook. This data can speak to a large fund and include performance indicators of the properties.

How data can be used for a better roadmap and better decisions

Data gives the front office the ability to focus on what is important and lay out forecasting models for how their fund is going to adjust, what types of assets they need to acquire, what assets they need to sell, how they need to look at their capital structure, and whether it is worth restructuring. Additionally, data offers insight into whether it is worth taking on more debt, acquiring more assets, or decreasing or increasing full-time employees. Data offers insight into what the future looks like, and that can help the front office make better-informed decisions.

ket? What can you do to accentuate the advantages that you have? What can you do to give your building new advantages? Maybe you have a class-B building that is competing with other B buildings but doesn’t have a conference center. Maybe the lobby is off-putting when you come in. What are the tenant types in the neighborhood? Are you trying to get law firms or other occupiers? It’s about comparing your property to the inventory in your market and looking at the occupants you are trying to get.”

Using blockchain, AI and ML for smart contracts to improve liquidity

Blockchain is a technology that enables the secure sharing of information. It helps investors stay organized and streamlined by protecting contracts, records, and legal documents. Blockchain is revolutionizing real estate by making it easier for limited partnership members to buy, sell, and manage their assets.

Smart contracts are helping fuel this trend, as they automate processes, streamline transactions, and improve security, efficiency, and transparency. Smart contracts also expand the pool of prospective buyers and sellers, further boosting liquidity. Utilizing smart contracts saves time and money and is helpful with funding gaps and redemption requests.

William Lively is CEO of EXtrance Inc., a commercial real estate investment platform with AI integration, machine learning and blockchain technology. EXtrance was independently acknowledged as the preeminent AI-powered real estate solution of 2023 by Acquisitions International and featured prominently among the top ten overall real estate

solutions by Proptech Outlook.

Data from page 16

Two22 in downtown Minneapolis has benefited from its own repurposing

Canadian Pacific Plaza: Unlock the ultimate work-life balance

In the heart of downtown Minneapolis, where inspiration thrives and energy flows, stands the iconic Canadian Pacific Plaza (CPP). This 26-story Class A office tower, located at 120 South Sixth Street, is more than just a building—it’s a vibrant community of professionals, amenities, and unparalleled conveniences. With a total of 393,902 square feet of leasable office space, CPP is a cornerstone of the city’s business district.

Constructed in 1960 and most recently renovated in 2018, CPP effortlessly blends timeless architecture with modern amenities. Major tenants like the Canadian Pacific Railroad add to the building’s rich history and diverse tenant base. However, CPP is not just about square footage; it’s about the quality of life it offers to its tenants. The building boasts an array of on-site amenities that cater to the modern professional’s every need. From a dedicated conference center equipped with cutting-edge audio-visual capabilities to a full-service fitness center, bike room, lounge, heated valet parking, on-site management, and 24/7 security with card access, CPP has it all.

Adding to the building’s appeal are the numerous food, beverage, and service options available on the first and second floors along with an abundance of food trucks parked just outside our doors. Whether you’re grabbing a quick coffee, enjoying a leisurely lunch, or seeking professional services, you won’t have far to travel. One of the standout features of CPP is its unbeatable location, offering direct access to major freeways and public transit options, including the light rail transit Blue and Green Lines on 5th Street that connect downtown Minneapolis to St. Paul, the Airport, and the Mall of America.

Perhaps one of the most compelling features is CPP’s connection to the Minneapolis Skyway System, a network of enclosed pedestrian bridges and indoor walkways that span over 60 blocks in the downtown district. This provides year-round, indoor access to retail, office, and government locations throughout downtown Minneapolis. Located just

blocks away from the new Minnesota Vikings stadium and with over 300 places to eat and drink in the vicinity, CPP offers more than just a workspace; it offers a lifestyle.

Canadian Pacific Plaza is a thriving community set in the heart of one of America’s most dynamic cities. With its rich array of amenities, unparalleled accessibility, and vibrant surroundings, it stands as a testament to what a modern workspace should be. Don’t miss the opportunity to elevate your business and lifestyle. Secure your space at Canadian Pacific Plaza today and experience downtown Minneapolis like never before.

In times of disruption, tried-and-true solutions won’t do. You need more — more innovation, broader perspective, keener foresight. We’ve learned this in our three decades of service to the real estate community. Through ups and downs. In good times and hard times. We’re ready to put our experience to the test again and help you find the way forward. Visit us at: MMBLawFirm.com

BRIEFS

shortage of high-quality and affordable housing options.

for the city of Eden Prairie’s long-term comprehensive plan.

Eden Prairie, an affluent southwest suburb of Minneapolis, is consistently ranked among the best places to live in America by Money Magazine, boasting a high quality of life, proximity to major employment nodes and a top-ranked school district. The site sits in the Golden Triangle Innovation Hub, which is home to 600 companies, as well as 20,000 jobs, making up half of Eden Prairie’s total employment base.

“The build-to-rent single-family rental market is perfectly positioned to meet the growing demands of modern households seeking spacious, contemporary living in vibrant neighborhoods, without the burden of homeownership,” stated Chris Picyk, Senior Vice President of Private Real Estate at CenterSquare.

Michel Commercial sells 48unit apartment complex in Minnesota

JLL Capital Markets has arranged joint venture equity and construction financing totaling $68.96 million for Golden Triangle Station, a mid-rise multi-housing development in the Golden Triangle neighborhood of Eden Prairie, Minnesota.

JLL worked on behalf of the sponsor, Greco and Eagle Ridge Partners, to secure the $47 million competitive construction loan through a regional bank. Additionally, JLL sourced $21.96 million in joint venture equity from Amstar Group.

The project is set to break ground this fall and will include 237 luxury housing units, as well as 315 underground parking spaces. The unit mix will include studio, one-bedroom, two-bedroom and three-bedroom units. Amenities at the property will include an outdoor pool, spa, theater room, club room, private dining and pickleball courts.

As part of Eden Prairie’s inclusionary zoning, roughly 25% of the units will be rented at 50% and 80% of the area median income. As a result, the project has received significant support from city staff, which has approved a Tax Increment Financing structure. The site is also situated in the heart of an area guided for transit-oriented development (TOD) via the Green Line extension, which is currently under construction.

The city of Eden Prairie has very little land guided for high-density residential development. This high barrier-to-entry alone makes the Golden Triangle project incredibly unique in that it is occurring on one of the few sites targeted for redevelopment by the city, and as part of the redevelopment effort, it is one of the last remaining areas guided for high-density residential development. It is an important driver

Minneapolis-St. Paul has one of the largest concentrations of Fortune 1000 companies in the world. The region is home to numerous international headquarters, American headquarters for foreign firms and substantial office operations for firms that are headquartered on either coast. With one of the lowest unemployment rates in the nation, investors, employers and workers continue to be drawn to Minneapolis-St. Paul, home to one of the most diverse and successful economies in the world.

The JLL Capital Markets Advisory Team representing the sponsor was led by Josh Talberg, Scott Loving, Matthew Schoenfeldt, Colin Ryan, Dan Linnell and Mox Gunderson.

CenterSquare acquires Minneapolis-area townhome community

CenterSquare has acquired Bentley Village, a 102-unit build-to-rent townhome community in Lake Elmo in the eastern suburbs of Minneapolis, Minnesota.

The property’s location features direct I-94 access and proximity to a robust retail hub that includes popular tenants like Whole Foods and Trader Joe’s. The property is under construction by one of the largest national home builders in the country. Completed homes will be acquired in phased takedowns, mirroring development progress, with the initial 16 homes already acquired and the final deliveries expected by March 2024.

Bentley Village offers spacious 3- and 4-bedroom floor plans, providing nearly 1,900 square feet of living space. These designs feature 2-car attached garages and inviting outdoor patios. Interiors showcase Class A finishes, including slate appliances, quartz countertops, undermount stainless steel kitchen sinks, and LVP flooring. In a region characterized by limited supply, these homes offer a distinctive and sought-after choice, addressing the

Michel Commercial brokered the sale of Gateway Place Apartments, a 48- home, affordable (Section 42) apartment complex in Chanhassen, Minnesota.

Gateway Place was developed by Sand Companies, Inc. of Waite Park, Minnesota.

This property drew multiple competitive offers with its large, well-maintained units, strong occupancy, and excellent location.

Steve Michel and Heidi Addo of Michel Commercial Real Estate facilitated the sale.

Kraus-Anderson begins $24 million renovation of White Bear Lake middle school

Kraus-Anderson has begun a $24 million renovation of Central Middle School at 4857 Bloom Ave. in White Bear Lake, Minnesota.

Designed by Wold Architects and Engineers, the 108,000-square-foot project will add a new gym and fitness area, expand the kitchen and cafeteria, and renovate the former district office to create additional classroom spaces.

JLL Capital Markets provides $68.96 million in equity, construction financing for Minnesota multifamily development

In addition, the project will update the classrooms, media center, flex areas and learning commons, and will include safety and security, and long-term facility (LTFM) upgrades. Construction will begin in August and is expected to be completed in late summer of 2025.

In addition to Central Middle School, KA will finalize construction this fall on a $5.8 million addition and expansion at Oneka Elementary School in Hugo, Minnesota. Both of these schools are projects that are a part of a $326 million building bond passed by White Bear Lake Area School District voters on November 5, 2019.

Several new tenants opening at Eden Prairie shopping center

Opened in 1976, Eden Prairie Center features over 100 shops and restaurants, with multiple anchors including SCHEELS, Von Maur, Target, JCPenney, Kohl’s and a food court with nine quick-serve restaurants. The center is known for its impressive entertainment wing that includes an 18-screen AMC Theatre featuring Prime and IMAX technologies for immersive movie experiences.

JLL Capital Markets closes $34.62 million refinance of 200-unit apartment building in West St. Paul

CBRE brokers sale of office component of Minneapolis’ RBC Gateway Tower

Eden Prairie Center, a 1.4-million-square-foot retail center in the southwest Twin Cities suburb of Eden Prairie, Minnesota, is preparing to welcome multiple new tenants to its retail line-up.

Let’s Roar sells activewear and gold-plated jewelry with a charitable component. High Score specializes in video games and vintage collectibles. T.S. Home Studio offers hand-poured soy candles and candle-making classes.

Located in the upper level of Eden Prairie Center in the Kohl’s wing, Let’s Roar will occupy 650 square feet, selling activewear for men and women and gold-plated stainless steel jewelry that will not tarnish.

Let’s Roar opened at Eden Prairie Center on Aug. 1. The full Let’s Roar apparel and jewelry line is also available online at letsroar.shop.

First opened in 2009 by a father-son duo, High Score is relocating to Eden Prairie Center and will occupy 5,045 square feet on the upper level of the center in the SCHEELS wing.

High Score is expected to open early August 2023.

Located on the upper level of Eden Prairie Center in the J.C. Penney wing, T.S. Home Studio will occupy 1,409 square feet, in which it will sell hand-poured, wood wick soy candles, wax melts and warmers, room sprays and reed diffusers, in addition to hosting in-store candle making classes.

JLL Capital Markets has arranged the $34.62 million refinancing of Savor Apartments, a 200-unit, mid-rise, market-rate multi-housing community in West St. Paul, Minnesota.

JLL worked on behalf of the borrower Roers Companies to secure the fixed-rate, 10-year, fullterm interest-only Fannie Mae loan. The loan will be serviced by JLL Real Estate Capital, LLC, a Fannie Mae DUS lender.

Newly built in 2022, Savor Apartments features one- and two-bedroom units with granite countertops, stainless steel appliances, vinyl plank flooring, in-unit washers and dryers and more. Community amenities include an entertainment suite, a community room, game room, work-from-home suites, coffee bar, rooftop skylounge, rooftop skydeck and a fitness center.

The property is situated at 1571 Robert St. S. and is minutes from US-52, allowing quick access to St. Paul and nearby suburbs.

The JLL Capital Markets Advisory team was led by Senior Director Scott Streiff and Managing Director Scott Loving.

CBRE has arranged the sale of the office component of RBC Gateway Tower, a newly constructed mixed-use tower in Minneapolis, Minnesota, for $225 million to San Francisco-based Spear Street Capital.

The transaction involves the 525,000 squarefoot office space, the ground floor office lobby and 296 executive below-grade parking spaces. The seller, Minneapolis-based United Properties, was represented by Ryan Watts, Tom Holtz, Brandon McMenomy, Steven Ward, Greg Greene and Harrison Wagenseil of CBRE.

“RBC Gateway Tower is a crown jewel in the Gateway District, with unmatched location and amenities. Premier properties like this offer exceptional workspaces that cater to the needs of modern employees, making them highly desirable as companies adapt to new workplace trends,” said Watts in a statement.

The 1.2 million-square-foot building at 250 Nicollet Mall houses Minnesota’s first five-star hotel, the 222-room Four Seasons Hotel Minneapolis, and 34 luxury Four Seasons Private Residences on the uppermost floors. Three restaurants are also on-site, including Chef Gavin Kaysen’s Mara, a full-service restaurant and bar, and Socca Café. The office space is currently 99% leased to six tenants, including anchor tenant RBC Capital Markets, United Properties and Pohlad Companies.

The sale did not include the Four Seasons Hotel Minneapolis or luxury condos located in the building.

Colliers Mortgage closes $18.3 million loan for rehab of St. Paul apartment complex

The Minneapolis office of Colliers Mortgage closed a $18.3 million HUD 221(d)(4) loan for the substantial rehabilitation of Sherman Forbes Housing in St. Paul, Minnesota.

The 104-unit, Section 8 multifamily property features one-bedroom and two-bedroom apartment units. Project amenities include on-site laundry, offstreet parking, community playground, community patio, and a leasing office. In addition to the HUD-insured first mortgage, the project will utilize 4% Low Income Housing Tax Credits and Tax-Exempt Bonds. The Bonds were underwritten by Colliers Securities LLC, an affiliate of Colliers Mortgage LLC.

The loan carries a 40-year term/amortization and was arranged for the borrower, Sherman Forbes Housing Partners, LLC, an affiliate of Vitus Group LLC.

Cushman & Wakefield brokers industrial lease of 150,000 square feet in Maple Grove

United Properties celebrates opening of 186-unit 55-plus community in Minnetonka

Davis celebrates grand opening of Wayzata medical center

Cushman & Wakefield represented MAS HVAC in its lease of 150,000 square feet at Arbor Lakes Business Park’s Building VI in Maple Grove, Minnesota.

Cushman & Wakefield’s Brent Masica represented MAS HVAC in leasing its new headquarters, manufacturing and logistics operations, which also includes 15,000 square feet of office space. MAS HVAC plans to occupy the new building in January.

United Properties celebrated the grand-opening of Amira Minnetonka, its newest 55-plus active adult rental community at 801 Carlson Parkway in Minnetonka, Minnesota.

This is United Properties’ third Amira community to open. Locations in Bloomington and Roseville, Minnesota, are fully leased.

Amira Minnetonka features 186 units ranging from alcove studio to three-bedroom floor plans. All rental units feature walk-in closets, in-unit washers and dryers, individual climate control and more. Many homes include a flex room that can be used as an office or hobby space, and most units feature private outdoor areas. Nineteen units are affordable, and rental fees for every unit are all-inclusive, except for electricity — making it an ideal option for 55-plus adults looking to budget monthly costs.

The active adult community’s on-site team manages day-to-day maintenance, freeing up residents’ schedules to utilize the community’s indoor and outdoor amenities, which include a golf simulator, library, yoga and fitness studios, an outdoor pool and hot tub, community gardens, fully furnished community rooms, a club room and sky lounge. Residents also have access to daily events and activities, such as community happy hours or an outing to a Twins baseball game.

Located near Interstates 394 and 494, Amira Minnetonka has easy access to Carlson Towers, nearby walking and bike paths, dining and shopping. The location is also within three miles of downtown Wayzata, which offers local restaurants and retail, and picturesque views of Lake Minnetonka.

Additionally, Amira Minnetonka is United Properties’ first residential building to feature solar panels. The 40-kilowatt system will offset electrical costs in common areas while supplying power back to the electrical grid.

Officials from Minneapolis-based Davis held a grand-opening ceremony June 15 to celebrate the completion of the 16,147-square-foot, Class-A Wayzata Specialty Center in Wayzata, Minnesota.

Tailwind Pediatric Dentistry and Lorenz Clinic, a family psychotherapy practice, are leasing the entire second floor of the two-story building. LAK MedSpa has a portion of the first floor at 1120 E. Wayzata Blvd. in Wayzata, a western suburb of Minneapolis. The architect for the project was Synergy Architecture Studio in Minneapolis. The general contractor was Timco Construction in Plymouth, Minnesota. In addition to developing the facility, Davis is also providing property management and leasing services.