When the sale of 317 Second Avenue South in downtown Minneapolis for $850,000 went through last week, it was unclear what the future held for the neo-classical eight-story building. The building was used by the Hennepin County Public Defender's Office up until 2009.

Late Thursday, Adam Seraphine, principal of the building's buyer, an entity related to Edina-based NHH Properties III, said it will be renovated into executive offices, collaborative workspace and conference facilities, as well as partial and full floor space for office tenants.

"With floor plates of approximately 7,500 square feet, small and medium-sized companies can enjoy full-floor status with an affordable lease," Seraphine said in a statement. The floor plans will be flexible enough to accommodate small businesses that grow into bigger businesses.

Constructed in 1904, the brick building was built as the headquarters for the Soo Line Railroad, and then served as the home of Western Union for more than 50 years. After that, it was used as a multi-tenant office building, and then, as the Public Defender's Office. 

Janet Moore covers commercial real estate for the Star Tribune.

Just Sold!  Even in the very best of the markets, houses built with unusual construction techniques can be a tough sell. This earth-sheltered  concrete house with a grass roof in Maplewood is a major exception. It sold within six days of hitting the market, and there were three offers above the $525,000 list price, though the sale price won't be disclosed until after the closing in mid June, according to listing agent, Richard Berger of Coldwell Banker Burnet. The house is on 2.6 acres, has a sweeping solarium and state-of-the-art energy efficient features, including on-demand tankless water heater and a passive solar design.

Last night, I was incredibly saddened to read here about the death of former United Properties president and CEO Ken Stensby, who died while hiking in Yosemite National Park.

Stensby served in the top position at the Bloomington-based firm from 1972 to 1995, when he retired. He was also instrumental in starting the Minnesota chapter of NAIOP, the commercial real estate organization, and later served on the group's national board.

In a statement Wednesday, Frank Dutke, the current president and CEO of United Properties, said, "Ken Stensby was a foundational leader of United Properties. He assembled a team of exceptional individuals, most of whom had little or no real estate experience in the early 1970’s, and together they built a highly successful, multi-faceted real estate company.” 

“Although he retired 18 years ago, his imprint on the company remains today. We remain deeply grateful for Ken’s leadership. All of us at United Properties are saddened by his loss,” Dutke said.

Less than a month ago, I interviewed Stensby for a profile I wrote about Julie Hughes, who began her career at United Properties as his executive assistant. Hughes recently retired as a senior vice president and regional director of property management at a sister company, Cushman & Wakefield/NorthMarq. She credited, in large part, the encouragement she received from Stensby for launching her considerable career.

Janet Moore covers commercial real estate for the Star Tribune. 

All the pieces are falling into place for the new Paragon Outlet mall that is planned for Eagan.

Recently, the CBRE Minneapolis Land Services Group said it represented the Baltimore-based outlet mall in the purchase of 29 acres for the development. The seller was the city of Eagan, and the selling price for just the land was $5.8 million. The overall sale price was $14.73 million, which included funds to relocate streets and utilities, and a contribution for parking.

Paragon Outlet Partners plans a $100 million 400,000-square-foot upscale outlet mall for the southeast quadrant of Highway 77 and Highway 13. The open-air mall is expected to open in late 2014.

Saks Fifth Avenue's Off Fifth will anchor the center with a 28,000-square-foot store -- one of about 100 stores that will locate at the mall.

Those specialty stores will include a Gap Outlet spanning 11,500 square feet and a 7,500-square-foot Banana Republic Factory store, according to Mid-America Real Estate-Minnesota LLC. (Retail specialist Johnny Reimann and senior vice president-principal Stefanie Meyer represented the tenants.) 

Brian Pankratz, the CBRE broker who handled the deal for Paragon, said in a statement, "The economic impact of the new Eagan outlet center will create new jobs for construction and retail, along with a strong new tax base for the city of Eagan moving forward."

The outlet mall will be part of the city's redevelopment of the Cedar Grove area -- the remaining vacant land could be developed into space for a hotel, apartments, restaurants and other retail uses.

The city recently received $595,955 in cleanup funding from the state for the 40-acre Cedar Grove site, which is contaminated with petroleum and other pollutants. The site was the former home of a gas station and a mall. The grant covers the portion of the site to be developed by Paragon.  

Janet Moore covers commercial real estate for the Star Tribune.

Jim Durda continues as the IDS' general manager.

The new owner of the IDS Center has made several key appointments for the downtown Minneapolis skyscraper.

Florida-based Beacon Investment Properties LLC bought IDS for $253 million in a deal finalized last week.

Beacon has reappointed Jim Durda vice president and general manager -- he's worked for IDS owners for the past 19 years. In addition, Jones Lang LaSalle will lease the 57-story tower, and Cassidy Turley will lease space in the Crystal Court retail plaza.

Jon Dahl, senior vice president, and Brent Robertson, vice president, head Jones Lang LaSalle's office leasing team, and Andrea Christenson, vice president for Cassidy Turley, will lead the retail leasing team. Cassidy Turley recently moved into the iconic tower.

Ariel Bentata, Beacon's chief investment officer and a founding partner, said in a statement that the firm "considers itself very fortunate to have the strong existing property management team and two of the Twin City's most-respected commercial brokerages representing our newest and largest property."

Janet Moore covers commercial real estate for the Star Tribune.

With new home starts up 53 percent  in the Twin Cities, finding a buildable lot is getting a whole lot more difficult.

Lot inventory is now at its lowest level since 2007, according to Metrostudy, a national research company with an office in Plymouth. Here are the highlights from the group's quarterly survey - hot off the presses.

• Lot supplies across the 7-county metro area fell to just 33.4 months, signaling a return to levels not seen since before the housing boom.
• 1,135 new homes were built, down 13 percent from the 4th quarter 2012, up 53 percent from last year. That was the fourth straight quarter during which starts exceeded 1,000
• The rate of annual new home starts for single-family and townhome units across the Twin Cities area is at 5,022 new units - a 56 percent increase compared with last and the highest annual starts pace since 2008.
• At the end of March there were 2,461 new housing units in inventory, up 7 percent from last quarter. 1,625 of those units (66 percent) are under construction, 547 (22 percent) are finished vacant inventory and 289 (12 percent) are model homes.
• The supply of new houses dropped to 6.5 months - a healthy figure, according to MetroStudy's Ryan Jones, who said that equilibrium is between 6 to 7 months.
• There are 24,559 vacant developed lots throughout the metro, 9 percent fewer than last year. In the 7-county metro there were only 12,052 vacant developed lots, a 13.7-percent decline from last year.

What's next? 

“While inventories remain tight, homebuilders will need to start looking to increase production in order to meet the growing demand," said Jones. "Look for the Twin Cities housing market to ramp up substantially over the next sixth months building up supplies of both housing and lot inventories. The market needs to stop worrying about next year and start planning for the next 5 – 10 years."