Warehouse District is still hot

The transformation of the Minneapolis Warehouse District shows few signs of slowing down, with the area continuing to be a magnet for advertising and creative-services businesses.

A four-story building at 900 N. 3rd St. that once housed manufacturing operations for two candymakers -- Fanny Farmer and Gurley Candies -- is the latest property put up for sale. The Twin Cities office of Colliers Turley Martin Tucker is marketing the building, with an asking price of $3.2 million.

The owners, Jack and Jane Buxell, paid $565,951 for the 62,000-square-foot building in 2000, according to Hennepin County property records. Their architecture firm currently occupies the ground floor, while a mini-storage business is on the second and third floors. The fourth floor is vacant.

Brian Woolsey, a senior associate at Colliers, said the building already has drawn interest from some potential buyers, including an architecture firm and a marketing design business. Both would likely occupy some space as well as own the building, Woolsey said.

An influx of ad agencies, graphic arts businesses, photo studios and other creative-services providers has driven demand for Warehouse District office space the past couple of years, with the area's vacancy rate now lower than that of the downtown market overall.

At the end of last year, the vacancy rate for office buildings in the Warehouse District -- older Class B and C properties -- was 10.9 percent, according to figures compiled by Colliers. The vacancy rate for top-tier Class A space downtown was 14.6 percent.

Twin Cities is a major market

The Twin Cities was one of 45 metropolitan areas in the country recording commercial property sales of $1 billion or more last year, a threshold that generally puts markets on the map to attract foreign capital, according to a recent report by Real Capital Analytics.

The New York-based real estate research firm said sales of all commercial property types in the Twin Cities totaled $2.96 billion in 2007. That tied the Twin Cities with Detroit for 26th among markets nationwide.

New York ranked first, with a staggering $78.4 billion in commercial property sales.

A large chunk of the money spent in the Twin Cities last year -- about $1.2 billion -- went for office properties, Real Capital said. The largest number of transactions -- 40 -- involved industrial properties.

Office properties also garnered the most dollars nationwide, accounting for about 40 percent of the dollar volume of all commercial property transactions in 2007, Real Capital said.

Susan Feyder • 612-673-1723