Last summer, we wrote about Minnetonka-based Oppidan Investment Co.'s big bet on oil-rich North Dakota.
The national property development firm said recently that it developed 783,467 square feet of property across the country in the second half of 2013, bringing the year-end total to about 1.8 million square feet. Also in the second half, the company sold 342,353 square feet of retail space, about 12 acres of land, 114 apartment units, 50 home sites and provided construction management services for seven projects (one of which is complete).
Of the 34 projects either completed, under construction, or the construction management projects under construction and the asset sales highlighted in the report for the second-half of 2013, 18 were in booming North Dakota.
Oppidan President Joe Ryan said last year was the best-ever for the firm, which was founded in 1991. "Oppidan continues to be a strong player in the development of North Dakota's Bakken region," he said. Oppidan "has proven itself to be a successful residential developer, and is sought out as a valuable construction management partner."
Despite thousands of new apartments that have come on line in recent years, Twin Cities landlors are still in the driver's seat. A year-end report from Marquette Advisors says the average apartment vacancy rate across the metro held steady at 2.5 percent through the end of 2013 . That was the 11th consecutive quarter of sub‐3.0- percent vacancies in the region. A full 43 out of 54 submarkets surveyed by the group reported vacancy rates of less than 3.0 percent during the 4th quarter even though 3,108 new rental units hit the market in the 2013 compared with 1,428 units during the previous year.
Strong demand and low vacancy rates continue to drive steady rent growth. The average market rent at the end of the year was $981 per month, a 2.5- percent increase from a year ago, though rent gains were even stronger in downtown Minneapolis.
We'll have a full report, including predictions for apartment construction this year, in the Wednesday paper.
- Jim Buchta
Chicago-based First Industrial Realty Trust Inc.confirmed Thursday that it has recently acquired the Rivertown Distribution Center in Woodbury for $13.4 million.
The 252,000-square-foot distribution center and warehouse is located at Interstate 94 east of downtown St. Paul.
First Industrial is a leading owner and operator of industrial real estate across the country. It owns and manages more than 4.6 million square feet of industrial property in the Twin Cities alone.
"We are pleased to add this quality industrial facility in the Twin Cities as we continuously seek to enhance our portfolio in the region," said Chris Willson, senior regional director for First Industrial's Minneapolis office, in a statement. "Rivertown's convenient location, loading capabilities, and clear height are competitive features that suit the business requirements of our tenants."
A new report by Jones Lang LaSalle probes how consolidation in the banking and financial services industry affects real estate decisions in various secondary markets, including Minneapolis-St. Paul. This comes as institutions trim costs as they face sluggish employment growth and new govenment regulations (the Volcker Rule) that require them to focus on their core businesses.
"Over the near term, the industry will become increasingly dominated by its largest and smallest players as operating in the middle market becomes increasingly difficult," the report states.
The study of recent leasing activity among banks and financial services firms across the U.S. and Canada found that renewals, consolidations and subleases are the "most-favored space strategies," according to the report. The missive mentions TCF Bank's current consolidation strategy of closing multiple retail branches and its decreasing need for office space in the CBD.
The biggest development locally noted in the report involves Wells Fargo's decision to consolidate its office space in downtown Minneapolis into the two office towers that will help anchor the proposed $400 million Downtown East complex.
Challenges facing the Twin Cities in terms of financial instititions and office space include the number of trophy properties that have sold recently, perhaps causing an increase in rents; the reduction of shadow space and retail branches; and the volatility facing the mortgage business.
An Eagan office tower that used to be the home of Blue Cross and Blue Shield of Minnesota is about to get a major make-over. St. Paul-based Interstate Partners has the 10-story tower and adjacent parcels under contract, and they plan to convert the tower into 112 rental apartments. Phase Two of the project will be construction of an additional 90 apartments and 30,000 to 40,000 square feet of retail along Yankee Doodle Road near Town Centre Drive, according to Interstate Partners partner, Lonnie Provencher.
The project received the first of three city approvals last night - a comprehensive guide plan amendment. The property is now owned by Open Space LLC. Provencher said that he hopes to begin construction by the second quarter. Conversion of commercial space into housing isn't unusual, but very fewer office tours are suitable for such conversion. Provencher said that this building is perfect for such use because it has big windows, appropriately located elevators and "amazing" views of downtown Minneapolis and St. Paul. The most notable example of such a conversion was the transformation of a high-rise office building in Minnetonka into the Cloud 9 Sky Flats in 2006.