FedEx Plans New $20M Facility in Maple Grove; Life Time Fitness Extends Lease at Target Center

By Gabriel Circiog, Associate Editor

FedEx is planning to build a new $20 million sorting and distribution center in Maple Grove. The new 276,400-square-foot facility is expected to open in 2014 and will replace the smaller facility FedEx leases in Brooklyn Park for its SmartPost business, The Minneapolis / St. Paul Business Journal reports.

FedEx SmartPost, a subsidiary of FedEx, has been growing in recent years and plans to expand its capacity by 80 percent in the next five years. Its current facility, the Crosstown building located at 7500 Setzler Parkway North, features 120,000 square feet of warehouse and distribution space.

Although FedEx has not announced yet how many jobs it will have at the new Maple Grove site, the company plans for 332 employee parking spaces. Located at 9997 85th Ave. North, the 42-acre site is close to Interstate 694 and Highway 81. Erin Truxal, a spokesperson for FedEx Ground said that the site was chosen due to its easy access to major highways, strong local workforce and proximity to customers’ distribution centers.

In other local news, the StarTribune reports Life Time Fitness has extended its lease at the Target Center and plans to invest millions of dollars in renovating the gym. Life Time Fitness has signed a 12-year extension on its lease, which was set to expire at the end of February. The agreement stipulates that the lease is automatically extended to 2028, as long as the Minnesota Timberwolves’ lease at the city-owned Target Center extends beyond 2025.

Photo Courtesy of: www.artisreit.com

KBS REIT III Acquires 40-Story RBC Plaza for $118.1M

By Gabriel Circiog, Associate Editor

KBS Real Estate Investment Trust III recently announced the acquisition of the 678,045-square-foot RBC Plaza. The Newport Beach, Calif.-based public non-traded REIT purchased the downtown Minneapolis mixed-use office building for $118.1 million (net of closing credits).

Located in Minneapolis’ financial district along Nicollet Mall at 60 South Sixth St., the 40-story RBC Plaza features 609,368 square feet of office space and 68,677 square feet of retail and amenity space on top of an underground parking structure. The retail component of the building is located on the first four floors of RBC Plaza and is connected via skywalk to a multi-building retail complex spanning two city blocks.

The seller, Brookfield Office Properties, was represented by Tom O’Brian and Terry Kingston with Cushman & Wakefield/NorthMarq and Mike Winn and Tim Richey with Cushman & Wakefield/Denver. KBS has hired Cushman & Wakefield/NorthMarq to manage and lease the asset, effective Feb. 1, 2013. Sonja Dusil will lead the leasing efforts, and Theresa Elveru will lead the property management team.

Rodney Richerson, KBS regional president, said: “We believe we have a great opportunity to convert some of the upper-level retail floors into creative office space, along with creating a primary entrance off of Nicollet Mall and improving the overall retail mix. In addition to these improvements, we anticipate adding stronger office amenities, conference rooms, a fitness facility and some lobby renovations that will cost approximately $3 million.”

As previously reported by Multi-Housing News, another KBS-affiliated company recently acquired another property in the greater Minneapolis area: Watertower Apartments, a 228-unit mixed-use apartment community in Eden Prairie.

KBS Closes on Acquisition of 228-Unit Eden Prairie M-U Community

By Gabriel Circiog, Associate Editor

Newport Beach, Calif.-based KBS Legacy Partners Apartment REIT has closed on its first acquisition of 2013: Watertower Apartments. The 228-unit mixed-use community, located in Eden Prairie, Minn., is situated close to I-494 and Highway 212 and just 16 miles southwest of downtown Minneapolis. The non-traded real estate investment trust is sponsored by KBS Capital Advisors L.L.C. and Foster City, Calif.-based Legacy Partners Residential Realty L.L.C. KBS currently owns a total of 1,980 apartment units in Minnesota, Texas, North and South Carolina, Illinois and Maryland.

Watertower Apartments was 94 percent occupied at the time of the acquisition and offers 228,775 square feet of mixed-use space in two adjacent structures. The three-story building features 28 residential units and 10,065 square feet of ground-floor retail space, while the four-story building features 200 apartment units above a two-level underground parking garage.

“We are very pleased to add Watertower Apartments to the KBS Legacy Partners Apartment REIT portfolio,” said W. Dean Henry, the REIT’s CEO. “The property boasts location, amenity and design advantages that we believe rival anything in the greater Minneapolis market.”

In other local real estate news, the StarTribune reports the signature Kellogg Square apartment tower in downtown St. Paul has been sold by Sentinel Management for $51 million. Golden Valley-based Bigos Management bought the tower, increasing its Twin Cities apartment portfolio, which currently features more than 42 owned or managed apartment communities.

Located at 111 E. Kellogg Blvd., Kellogg Square, built in 1970, has 450 apartments and features commercial space and a parking structure with 594 stalls. Sentinel was represented in the deal by NAI Everest.

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.watertowerapts.com

$78M Duluth Airport Terminal Opens for Passengers

By Camelia Bulea, Associate Editor

After more than four years in the works, a new passenger terminal at Duluth International Airport has opened. The new state-of-the-art facility cost $78 million to build and features lots of glass and natural light.

The terminal is characterized by a glass-fronted wall rising 40 feet, with a roof imitating the shape of a wave. The passenger concourse can accommodate more than three times the number of passengers the old waiting area could, allowing 400 passengers to board their flights, according to the Duluth News Tribune. “There’s a lot of volume, and it’s grand,” said Elizabeth Samsa of TKDA, the lead interior designer.

Samsa added that warm wood tones were used on wall panels and portions of the ceiling to balance the natural light. The new design was meant to create a warmer airport than the old one, which was built in 1973.

Next month, developers will start demolishing the old terminal, which sits behind the new one, in order to make way for more aircraft parking. The parking ramp project, which is expected to be completed in the fall of 2013, is part of the $78 million project cost.

The project was entirely financed with federal grants and state bonding money.

The designer, Reynolds, Smith & Hill, sought LEED Silver certification for the 110,000-square-foot terminal, which features sustainable green energy elements like geothermal heating, natural lighting and a highly efficient water system. The general contractor was Minneapolis-based Kraus-Anderson Construction Co.

Photo of the new terminal at Duluth International Airport: Bob King of the Duluth News Tribune, rking@duluthnews.com.

For more market data on Minneapolis, please click here.

Sears Plans Major Redevelopment Project at St. Paul Site

By Camelia Bulea, Associate Editor

Developers announced big plans for the site surrounding the St. Paul Sears store near the State Capitol. Sears’ redevelopment plans call for new retail, an office building and residential space.

According to Finance & Commerce, the redevelopment of the 14-acre site on Rice Street will include the following:

-          An additional 111,700 square feet of retail space in four separate buildings attached to the south side of the existing Sears building;

-          121 apartments and 18 townhomes in the northwest corner of the property;

-          A four-story, 112,000-square-foot office building;

-          A 586-space parking ramp.

The project will be built in three phases, with retail space built in the initial phase, followed by the office property and parking garage. The site, now home to 700 parking spaces, is located south of the Central Corridor Light Rail Transit line, which is considered to be a catalyst for new development in the area, Cecile Bedor, city planning and economic development director, told the Pioneer Press.

The plan will go before the state’s Capitol Area Architectural and Planning Board for design concept approval on Jan. 16, the Twin Cities publication reported.

In other interesting news, Nordstrom Inc. announced plans to open a full-line store at Ridgedale Center in Minnetonka. The new store will be approximately 138,000 square feet and is scheduled to open in fall 2015. This will be the second full-line store in the Twin Cities for the Seattle-based retailer.

Image rendering of the Sears redevelopment project courtesy of the city of St. Paul, via Pioneer Press.

For more market data on Minneapolis, please click here.

Opus Breaks Ground on Second Downtown Minneapolis Luxury Apartment Complex

By Gabriel Circiog, Associate Editor

Opus Development Corp. recently announced plans to begin development and construction of a new boutique luxury residential apartment complex in downtown Minneapolis. The project, dubbed VÉLO, French for “bicycle,” will be owned by Twin Cities-based real estate investment company Sentinel Management Co. 

Located at 103 N. Second St. In the North Loop neighborhood, VÉLO will feature 101 luxury units and 12,000 square feet of retail space on the first level. The residential complex is closely located near Minneapolis’ well-known bike path system and offers access to various amenities including an outdoor plaza, club lounge, yoga studio, fitness centers and rooftop terrace, complete with resident garden boxes.

“We’re excited to offer a unique living experience for those seeking a luxury and lifestyle-rich rental option in the thriving North Loop neighborhood,” said Tom Lund, vice president of real estate development for Opus. “VÉLO will be the ultimate hub for residents seeking a balanced lifestyle in the heart of America’s premier bike city.”

The project is scheduled to break ground in April 2013 and is expected to be completed and ready for occupancy in spring 2014. Observed Luigi Bernardi, president of Sentinel Management Co. and Aurora Investments L.L.C.: “We are looking forward to working with Opus on developing this unique and exciting property in the heart of Minneapolis.”

The developer of the project is Opus Development Corp., while Opus Design-Build L.L.C. will construct the building. Opus AE Group Inc. and Elness Swenson Graham Architects Inc. will collaborate on the design.

As previously reported by Commercial Property Executive, Opus Development Corp. is also currently developing The Nic on Fifth, a 26-story luxury apartment building in downtown Minneapolis, slated for completion at the beginning of summer 2014.

For more market data on Minneapolis, please click here.

Rendering Credits to: Opus AE Group Inc. and Elness Swenson Graham Architects Inc. via www.minneapolisloftscondos.co

HealthPartners Opens $36M Mental Health Building at Regions Hospital

By Gabriel Circiog, Associate Editor

HealthPartners recently announced the opening of a new mental health building at Regions Hospital. The new eight-story facility will replace the existing inpatient facility on its St. Paul campus.

“Regions Hospital is a place of hope and healing, and we continue to make investments that reflect the needs of the community,” said Brock Nelson, president & CEO of the hospital. “This project is more than a building. It’s about providing our patients and their families care in an environment that is equal to the level of care we provide for other illnesses.”

The new $36 million building is specifically designed to care for patients with mental illnesses and features 100 private rooms, with the possibility to add 20 more, close to double the size of the previous space. The construction process lasted 18 months and factored in the input of former patients and family members in the design and the way care is provided. The facility is the largest private investment in mental health in state history.

“The care we provide will play an important part in our patients’ road to recovery, but we know it is just one part of the journey,” said Mary Brainerd, president & CEO of HealthPartners. “Together with the HealthPartners Clinics and community-based resources, we can provide patients with the right level of care throughout their treatment.”

In other healthcare real estate news, Sabra Health Care REIT Inc. acquired an 87-bed skilled nursing facility in Minneapolis known as Camden Care Center for $7.2 million. At the same time, Sabra Health Care signed a 15-year triple-net lease with Trinity Health Systems L.L.C. for the property. The initial yield on cash rent is expected to be 10 percent, with $0.9 million in annual lease revenues.

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.regionshospital.com

LCS Enters into JV with Nine Senior Living Communities

By Gabriel Circiog, Associate Editor

Des Moines, Iowa-based LCS has entered into a joint venture with Chicago-based real estate investment firm Harrison Street Real Estate Capital that has acquired an equity position in nine senior living communities in Greater Minneapolis.

The market-rate rental communities feature a total of 1,116 residential units. Through CRSA, an LCS company, LCS will provide a wide range of management and marketing services to the communities. Out of the nine communities, seven offer assisted living care and one provides memory care services.

“LCS and CRSA are pleased to have the opportunity to offer our hospitality, management and marketing expertise to this impressive collection of senior residences,” says Steve Nornes, director of operations management for CRSA. “Each community will receive customized support based upon our 41-year experience in the management and development of senior living communities.”

The nine communities on which LCS and Harrison Street have partnered include Earle Brown Terrace–Brooklyn Center; Heathers Estates–Crystal; Heathers Manor–Crystal; Meridian Manor–Wayzata; The Rivers–Burnsville; The Timbers–Apple Valley; Tradition–Brooklyn Park; Waterford Estates–Brooklyn Park; and Waterford Manor–Brooklyn Park.

Founded in 1971, LCS has had a presence in the Twin Cities area since 1978. Currently the company is developing Trillium Woods, a continuing-care retirement community in Plymouth, Minn. The new developments will be managed by Life Care Services, an LCS company that specializes in the management and marketing of CCRCs. Overall, LCS companies currently provide services to more than 30,000 residents in 31 states and the District of Columbia.

For more market data on Minneapolis, please click here.

Opus Closes on Financing, Prepares to Break Ground on Luxury High-Rise Apartment Building

By Gabriel Circiog, Associate Editor

Opus Development Corp. recently announced it has closed on financing for a planned luxury high-rise apartment building, The Nic on Fifth. The name of the development reflects the location of the project on Nicollet Mall and Fifth Street in downtown Minneapolis. The financing was provided by SunTrust Bank, and construction is expected to break ground by the end of November.

“With the financing secured, Opus is thrilled to begin work on The Nic on Fifth. Minneapolis is definitely a top-tier city for both equity investors and lenders,” said Dave Menke, senior vice president & general manager.

As previously reported on this page, the project is adjacent to another Opus project, the new Xcel Energy building. The two properties aim to transform the north end of Nicollet Mall.

Opus is joint venturing with private real estate investment firm Founders Properties L.L.C. According to Founders senior vice president Wade Lau: “This is a major investment in Downtown, and we are extremely pleased to be involved in a project that is so instrumental in transforming our central business district.”

The Nic on Fifth is set to become the first new high-rise residential building in downtown Minneapolis in close to 30 years. The 26-story luxury apartment building will feature 253 units, 26 of them penthouses. The building will also be the first high-rise apartment project designed to achieve LEED certification. The construction will feature high-end finishes and amenities including 24/7 concierge service, an outdoor roof terrace with pool and spa, a yoga studio, a fitness center, an outdoor fire pit, guest suites and a dog play area. The first residents are expected to move in at the beginning of summer 2014.

“The Nic on Fifth will bring a new level of luxury apartment living to downtown Minneapolis and establish a new benchmark for those seeking high-end luxury high-rise living. The combination of extensive amenities, a light-rail station, skyway connectivity, restaurants and retail will be very attractive to residents looking for luxury high-rise living,” said Tom Lund, Opus’ vice president of real estate development.

The building will be constructed by Opus Design Build L.L.C., while Opus AE Group Inc. and Elness Swenson Graham Architects Inc. will collaborate on the design.

For more market data on Minneapolis, please click here.

Rendering courtesy of www.ci.minneapolis.mn.us

Shorenstein Properties Acquires Minneapolis City Center for $202.5M

By Gabriel Circiog, Associate Editor

Shorenstein Properties has closed on the acquisition of Minneapolis City Center, a 50-story mixed-use complex located in the heart of downtown Minneapolis. Shorenstein made the purchase on behalf of Shorenstein Realty Investors Ten L.P., a commingled fund formed in 2010 and with $1.2 billion of committed capital.

Located at 33 S. Sixth St., the complex occupies an entire city block bounded by Nicollet Mall, Hennepin Avenue and Sixth and Seventh Streets. The 1.6 million-square-foot complex features a 50-story tower with 1.1 million square feet of Class A office space on top of a 489,000-square-foot, four-level retail podium. The anchor tenant is Target Corp., occupying 72 percent of the office space under a lease that expires in December 2023. Overall, the property is 95 percent leased. The transaction also included a 687-stall, three-story parking structure and a ground lease encumbering the 583-room Minneapolis Marriott City Center Hotel adjacent to the complex.

Shorenstein Properties acquired Minneapolis City Center from Brookfield Office Properties Inc. for $202.5 million gross. Net proceeds to Brookfield were around $106 million. Eastdil Secured advised Brookfield on the sale.

Shorenstein Properties chairman & CEO Douglas Shorenstein said: “This property is in a superior office and retail location in a dynamic city. Minneapolis is growing faster than many larger metro areas, and it has wisely invested in its future success by developing the infrastructure necessary to attract more businesses and residents to downtown. We are pleased to have Target, which has done so much for Minneapolis, as our major tenant. We plan to work with our tenants and the community to add value to the city and to this important property by using our extensive expertise operating Class A office properties.”

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.brookfieldofficeproperties.com

Chambers Street Properties Acquires Industrial Building in Rogers

By Gabriel Circiog, Associate Editor

A New Jersey-based real estate investment trust, Chambers Street Properties, has acquired a warehouse/distribution building in the northwestern Minneapolis suburb of Rogers.

Located at 20000 S. Diamond Lake Road, the 280,577-square-foot facility was developed in 2004 and is currently fully leased on a triple-net basis. Situated on 15.2 acres of land, within an established industrial park, it benefits from regional highway access. The state-of-the-art building features 32-foot clear heights, 32-dock loading doors, parking for 215 vehicles and one drive-in door.

“This is an excellent asset, built to high standards in a quality location, and we are delighted to add it to our growing portfolio,” said Phil Kianka, executive vice president & COO for Chambers Street Properties. “The economic recovery in the Minneapolis market, the 10th largest industrial market in the country, continues to show improvement, and total employment is projected to increase over the next five years, making this a desirable asset for Chambers Street Properties.”

The 20000 S. Diamond Lake Road building is not the first property acquired by Chambers Street Properties in the submarket, the trust having acquired a 335,000-square-foot distribution facility at 13201 Wilfred Lane in Diamond Lake Park in June 2009.

According to the Hennepin County property tax records list, quoted by the Minneapolis / St. Paul Business Journal, the previous owner was Minneapolis-based Geneva Arcx. Details of the transaction were not disclosed, and the most recent recorded sale for the property was in February 2005 for $13.4 million.

Chambers Street Properties, formerly CB Richard Ellis Realty Trust, invests in real estate and focuses on office and industrial properties located across the major metropolitan areas of the United States and internationally.

For more market data on Minneapolis, please click here.

Logo Courtesy of: www.chambersstreetproperties.com

Chesapeake Lodging Trust Acquires 222-Room The Hotel Minneapolis

By Gabriel Circiog, Associate Editor

Chesapeake Lodging Trust has recently acquired The Hotel Minneapolis, a 222-room Marriott Autograph Collection hotel, for $46 million, or approximately $207,000 per key. The self-advised lodging real estate investment trust funded the acquisition with a borrowing under its revolving credit facility.

James L. Francis, the Trust’s President and Chief Executive Officer, stated, “We are thrilled to expand our portfolio with another high-quality, full-service boutique lifestyle property located in the core CBD of Minneapolis. The property has been meticulously restored and is one of the premier hotels in the city.”

Located at 215 Fourth Street South, The Hotel Minneapolis is connected to the city skywalk system which unites more than 80 block and over 26 million square feet of office and retail buildings across downtown Minneapolis. The 10-story hotel feature 22 suites, 6,000 square feet of meeting and catering space, the 250-seat Max Restaurant and Bar, a business center, a fitness center and around 12,000 square feet of leased tenant space. James L. Francis added: “While we don’t value the tenant cash flow separately from the hotel’s operations, these spaces enhance the cash flow of the property by over 10%.”

The Hotel Minneapolis, through a restoration program, has retained original details and features of the historic 1906 Midland Bank building in its lobby and ground floor. Talking about the modern design of the hotel, James L. Francis said: “The overall attention to the smallest of details is remarkable; this is truly a special property and excellent addition to our portfolio.” Original bank vaults have been incorporated throughout the building, including the original bank cashier vault, Audrey’s Vault, which now serves as the centerpiece of the hotel’s social catering space and the hotel’s wine cellar.

Chesapeake Lodging Trust has entered an agreement with a subsidiary of HEI Hotels and Resorts, the hotel’s current operator, to manage the property and to continue its affiliation with Marriott under the Autograph Collection.

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.thehotelminneapolis.com

Hyatt Acquires Downtown Minneapolis Hotel

By Gabriel Circiog, Associate Editor

The Hyatt Hotels Corp. recently announced that a Hyatt affiliate acquired a select-service hotel, the 213-room Comfort Suites in downtown Minneapolis. Following $20 million in capital improvements, the hotel will be rebranded as Hyatt Place Minneapolis Downtown.

Upon completion of the improvements, an affiliate of Summit Hotel Properties Inc. plans to buy the hotel from the Hyatt affiliate, which will continue to manage the property. The rebranding and ownership change is scheduled for the summer of 2013.

Stephen Haggerty, Hyatt’s global head of real estate and capital strategy, said: “Recycling capital to allow continued strategic growth is core to our business approach, and this transaction is the perfect example of how we are executing that in an effort to help Hyatt as well as owners achieve that growth. Summit was one of the first companies to recognize the potential of the Hyatt Place brand, and we are excited to have identified new opportunities for us to grow the brand and our relationship with such a valued company.”

Located at 425 S. Seventh St., the Hyatt Place Minneapolis Downtown offers easy access to the city sports stadiums, including the venues for the Minnesota Timberwolves, Minnesota Twins and Minnesota Vikings. The property is also close to the city’s historic Hennepin Theater District, as well as various dining and shopping venues.

Hyatt Place Minneapolis Downtown will be the fourth Hyatt-branded hotel in the Minneapolis area, and Dan Hansen, president & CEO of Summit Hotel Properties, said: “Hyatt has invested an impressive amount of its own capital in the Hyatt Place brand, which gives Hyatt a level of credibility with owners not typical in the industry. That commitment demonstrated that Hyatt understands how Summit approaches our business, which has been a key factor in driving new ways to deepen our relationship.”

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.comfortsuites.com

Valspar Announces $30M Campus Renovation, Expansion; St. Paul Reopens Ballpark Builder Selection Process

By Gabriel Circiog, Associate Editor

The Valspar Corp. announced plans to renovate its former headquarters building and expand its research-and-development campus in downtown Minneapolis. The campus is the anchor of the company’s research-and-development network worldwide, known as the Valspar Applied Science and Technology Centers (VAST). According to Dr. Cynthia Arnold, senior vice president & chief technology officer for Valspar: “The expanded campus will enable research and development at the highest level, as well as create the right environment for customer and supplier collaboration for new coatings technologies.”

The company, one of the largest global coatings manufacturers in the world and one of Minneapolis’ oldest global companies, dating all the way back to 1806, will invest $30 million in the project, which is expected to create as many as 135 full-time jobs over the next two years, including high-paying material science jobs. Gary Hendrickson, chairman & CEO of Valspar, said: “We will devote more resources toward developing differentiated coatings technologies to address the changing needs of our customers. Our scientists and researchers will have access to a best-in-class facility to more quickly and efficiently bring these solutions to market.”

In other local real estate news, The Minneapolis / St. Paul Business Journal reports the city of St. Paul has reopened the selection process for the new $54 million St. Paul Saint’s ballpark. The announcement comes after a series of questions from the news media and a lawsuit filed by the Taxpayer League of Minnesota, questioning why the selection process didn’t incorporate a competitive bidding. The city initially announced that the design-build services for the project, planned for the Lowertown area of St. Paul, would be awarded to Ryan Cos. US Inc. The Minneapolis-based company has already carried out pre-design work on the project for the city and declared its disappointment in the redefining of the selection process at such a late stage. The new selection process, which is expected to last 120 days, will create certain delays, but Mike Hahm, St. Paul’s Parks and Recreation director, is confident the park will be ready by opening day in May 2015.

Photo Courtesy of: www.valspar-asia.com

AFL-CIO HIT Invests $15.7M in M-U Construction Uptown

By Gabriel Circiog, Associate Editor

The AFL-CIO Housing Investment Trust has invested $15.7 million in the construction of the City Walk Apartments, a mixed-use development in Minneapolis’ Uptown community.

The HIT investment of union pension funds will help construct a six-story building featuring 92 housing units, underground parking, retail and restaurant space, and a new public pedestrian plaza.

Located in the heart of Uptown, a high-density commercial and residential district that has seen significant development in the past few years, the City Walk Apartments will be situated close to another HIT-financed development that was completed in 2009: the $13 million Solhem apartments.

Dan McConnell, business manager for the Minneapolis Building and Construction Trades Council, said: “The HIT is keeping our members busy with another investment in union-built housing in Minneapolis. That means another quality apartment project for the city and family-supporting jobs for our members.”

During the past 10 years, the HIT has invested more than $380 million in the Minneapolis-St. Paul metropolitan area. With more than 4,000 units of housing built or preserved in 31 projects, it has generated more than 3,600 jobs for members of the local building and construction trade unions. The project’s mortgage banker is Oak Grove Commercial Mortgage L.L.C.

The investment is part of the HIT’s national Construction Jobs Initiative, a program that aims to create 15,000 union construction jobs over a three-year period. To date, investments by HIT and its subsidiary Building America CDE have leveraged more than $2.5 billion worth of development on 49 projects in 27 cities, generating more than 14,000 union construction jobs.

Charts courtesy of: Marcus & Millichap.

Polaris Industries Breaks Ground on Expansion of Product Development Center

By Gabriel Circiog, Associate Editor

Polaris Industries Inc. recently broke ground on an expansion of a product development center near Wyoming, Minn.

Various Polaris executives, politicians and civic leaders attended the groundbreaking ceremony, including U.S. Sen. Amy Klobuchar, U.S. Congressman Chip Cravaack and Commissioner Mark Phillips of the Minnesota Department of Employment and Economic Development (DEED). “This investment is an important boost to the local economy and will help maintain Polaris’ place as an industry leader and innovator,” said DEED Commissioner Phillips.

The StarTribune reports the Polaris Industries is set to spend $20 million to build the 144,000-square-foot addition to its existing facility, located on 620 acres of land around 30 miles north of Minneapolis. The contractor, Ryan Cos., will start construction next week, and the project is expected to be finalized by August of next year.

Polaris first opened the product development center in 2005, with the help of the state’s JOBZ tax incentive program, Ryan Cos. having led construction of the original building. “We were excited when Polaris chose Ryan to construct its product development center in 2005, and we’re feeling that excitement again as we partner with Polaris to expand the facility,” said Pat Ryan, president & CEO of Ryan Cos. US Inc.

Polaris is expecting to transfer around 100 employees into the new space and ultimately plans to add another 300 workers to the facility over the next three years. Greater MSP, the region’s economic development partnership, coordinated the effort to compile a package of financial incentives to help Polaris expand. A mix of R&D credits, JOBZ financing, job training support, infrastructure improvements and other incentives were drawn up in collaboration with Chisago County, the city of Wyoming and DEED to support Polaris’ project.

For more market data on Minneapolis, please click here.

Image Courtesy of: www.ryancompanies.com

Hines Breaks Ground on New For-Rent Multifamily Complex

By Gabriel Circiog, Associate Editor

Houston-based developer Hines has broken ground on the Dock Street residences, a new for-rent multifamily complex in the North Loop neighborhood of Minneapolis, close to Target Field, home of the Minnesota Twins pro baseball team.

Developed by Hines and financed by the AFL-CIO Building Investment Trust, the six-story complex will feature 185 market-rate rental units, 3,000 square feet of retail space, as well as a two-level parking garage. The project is part of the North Loop Green, a larger development plan for the area that will include other for-rent residences, office and retail spaces.

Representatives of AFL-CIO Building Investment Trust and Hines, as well as Mayor R.T. Rybak and members of the Minneapolis Building and Construction Trades attended the groundbreaking ceremony. Kevin McCarthy, president of PNC Realty Investiors Inc., investment advisor to the BIT, said: “We believe Dock Street will prove to be a sound investment for our investors.”

Located at 333 Washington Ave. N., the property is situated in the center of the Washington Avenue entertainment corridor and at the junction of Minneapolis’ public transit system. Slated as the first ground-up private development in the transit-oriented Interchange/Ballpark District, the Dock Street residences “will be very pedestrian, bicycle and transit friendly and it will add to the vibrancy of the North Loop Neighborhood,” according to Bob Pfefferle, Hines’ local director of development.

The on-site construction will be carried out by union workers affiliated with the local building and construction trade unions. The Dock Street project is the second recent BIT investment in Minneapolis, following the $38 million Flux Apartment complex, which was completed in April. The Flux Apartment project is already fully leased.

The Dock Street residences are expected to be completed in the fall of 2013.

For more market data on Minneapolis, please click here.
Rendering Courtesy of: www.dockstreetresidences.com

Chicago-based REIT Acquires 235-Bed Student Housing Property in St. Paul

By Gabriel Circiog, Associate Editor

Chicago-based real estate investment firm Harrison Street Real Estate Capital has closed on a 235-bed student housing property dubbed Stadium Village Flats, the Minneapolis / St. Paul Business Journal reports.

Situated at the University of Minnesota in St. Paul, the Stadium Village Flats were sold by the Opus Group. The sale occurred about a week after the Minneapolis-based company finished construction on the student housing project. The terms of the deal were not disclosed.

The off-campus student housing project is located at 850 Washington Ave., S.E., near Williams Arena and TCF Bank Stadium. The development features a variety of amenities, including a fitness center, a yoga studio, a computer-study room, a gaming room, a penthouse lounge and a 15-seat big-screen theater. The first floor retail space is anchored by a CVS Pharmacy store occupying 14,000 square feet.

So far in 2012, Harrison Street has acquired a dozen student housing projects, including Stadium Village Flats, with a total value of $400 million. The firm is in contracts on seven more student housing assets, which are scheduled to close in the upcoming months. In a press release, Christopher Merrill, co-founder, president & CEO of Harrison Street, said the firm’s total student housing portfolio is expected to exceed 30,000 beds with a total value reaching $2 billion by year-end 2012.

Founded in 2005, Harrison Street Real Estate Capital has approximately $4 billion in assets under management. The firm currently owns about $3.5 billion in real estate assets, including over 25,000 student housing beds, more than 6,000 seniors housing/assisted living units, over 1.4 million square feet of medical office space and more than 72,000 self-storage units.

Rendering Courtesy of: www.stadiumvillageflats.com

Chart Courtesy of: Marcus & Millichap

Luxury Residential Development Announced in St. Louis Park

By Gabriel Circiog, Associate Editor

A new luxury residential development has been announced in the inner-ring Minneapolis suburb of St. Louis Park.

A joint venture that includes Madison, Wis.-based E.J. Plesko & Associates Inc., Fiduciary Real Estate Development Inc. and Northwestern Mutual, both of Milwaukee, will develop the 36 Park Apartments. Located at 3601 Park Center Blvd., at the intersection of Highway 100 and West 36 Street, the development is close to local parks as well as shopping, dining and entertainment venues.

The 10-story development was designed by Chicago-based architectural firm HOK. Observed David Gevers, director of development for E.J. Plesko & Associates, “36 Park is a unique combination of exceptional design, environmental stewardship, art and better living functionality.” The apartment community will feature 192 units and will include a combination of luxury amenities such as a clubroom featuring a billiards table and a culinary kitchen, a piazza recreation area providing various outdoor games, and a rooftop terrace with a fire pit, grill and picturesque views of the Minneapolis skyline.

The StarTribune reports the monthly rents will range from $1,300 for one-bedroom units to $2,545 for two-bedroom, two-bathroom units with dens.

The 36 Park Apartments development, slated for completion in March 2013, is the latest luxury residential development in the Minneapolis market. As previously reported on this page, Opus Development recently announced that it has secured financing for a 27-story, 250-unit luxury rental tower in downtown Minneapolis. Construction on the $90 million project, located at the corner of Nicollet Mall and South Fifth Street, is scheduled to start in early December.

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Rendering Courtesy of: www.stevensconstruction.com

Normandale Lake Office Park Sells for $268M

By Gabriel Circiog, Associate Editor

The Normandale Lake Office Park, a five-building complex located in Bloomington, was acquired by an affiliate of Chicago-based Equity Group Investments.

Situated on 23 acres of land at the southwest corner of I-494 and Highway 100 in the Southwest suburb of Bloomington, the 1.7 million-square-foot Class A office complex features five office towers connected by enclosed skyways. Commercial Property Executive reports that the largest Class A office asset in the Minneapolis market was acquired in a joint venture for $268 million, exceeding the $255 million industry experts had expected the property to command in the sale.

David Helfland, Equity Group Investments’ co-president, who led the venture with GEM Realty Capital Inc. and Perennial Investments and Advisors L.L.C., said: “Normandale is the premier office environment in the Minneapolis market. The complex has a long track record of successfully serving the needs of the area’s most prestigious tenants. We are committed to maintaining the park’s premium market position and exceptional reputation.”

Leasing and management services for the office complex are provided by Cushman & Wakefield / NorthMarq. Normandale Lake Office Park is home to more than 85 companies, including Prime Therapeutics, Emerson Corp., Weber Shandwick and Oracle Corp. The complex is 84 percent leased and currently has available floorplates ranging from around 20,000 to 28,000 square feet, and contiguous spaces as big as 75,000 square feet.

Each of the buildings has an attached parking garage and offers access to the park amenities, which include first-class restaurants, delis, a childcare center, fitness facilities and multiple conference facilities.

Equity Group Investments, a private investment firm founded by Chicago billionaire Sam Zell more than 40 years ago, has a diverse portfolio spanning industries and continents with interests in real estate, energy, logistics, transportation, communications and healthcare. EGI invested in Normandale Lake Office Park through the Zell Credit Opportunities Fund.

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