Commercial Real Estate Market Update Q3 2017
The industrial market as a whole had a strong quarter with an absorption of just under 1,200,000 square feet. Vacancy rates continue their downward trajectory and have fallen to under 9% in the metro area. Currently, there is over 3,000,000 SF under construction throughout the metro.
The outlook for office market is very mixed. Office employment (office using jobs) added 7,000 jobs in the past year. However, because companies are changing how they use space, vacancy in the office market actually increased to almost 18%. There are a few exceptions, but we expect this trend to continue.
Commercial Real Estate Market Update Q2 2017
As spring arrives, the market for commercial real estate continues to do well. The downside is that we may be nearing the peak of the current cycle in both the office & industrial market.
The industrial market as a whole absorbed a little over 2.600,000 SF of space in 2016. Vacancy rates continue their downward trajectory and have fallen to approximately 7% in the metro area. However, a quick look at development trends suggests a peak may have been reached. Developers have clearly shifted from ‘spec’ development to ‘build-to-suit’ projects as demand has leveled off. What does this mean for Landlords & Sellers? Landlords are having increased activity, see increasing rents/prices, and are limiting concessions for new tenants.
The outlook for office market is following the same path. Office space in the North Loop & West End areas remain hot and rents are increasing across the metro. Employers are continuing to re-evaluate their space to attract top talent. The trend is towards collaborative workspaces that include fewer private offices, more open space and buildings with worker-friendly amenities.
9200 Hudson Blvd | Lake Elmo, MN
46,000 SF | 9.95 Acres
Cranky Ape called on CRE Partners to assist them with selling 9200 Hudson Blvd in Lake Elmo, MN. The main goal was to maximize the value of the current site and additional, find a new home for the company.
The 9200 Hudson blvd project had numerous challenges. While the site had great visibility on I-94; the buildings were functionally obsolete, the land was long and narrow, and the city of Lake Elmo is not always open to redevelopment. In addition, the sale and purchase of a new location had to happen simultaneously.
CRE Partners worked with the owners on a marketing plan to focus on a very narrow set of buyers to achieve the highest and best use for the site (and highest selling price). After reviewing many offers, we moved forward with a mini-storage developer. CRE Partners helped navigate the environmental issues, city process, and risk involved with the corresponding relocation. Ultimately, the building sold for $2.9M ($2.95M asking price). In addition, the owners sold and purchased a new home on the same day. With a brief leaseback, they were able to smoothly transition into their new building.
Haves vs Have Nots In the Office Space Market
The Minneapolis Office Space market has a unique trend happening. Certain sections of the metro are seeing significant rent growth, a dramatic reduction in available space, and a certain amount of buzz. Most notably the West End and North Loop areas. However, this is not the case in most subsections of the market as many buildings are struggling to just to get a showing.
Can Independent Firms Compete with Corporate Giants in Commercial Real Estate?
Working under the umbrella of some of the CRE industry’s biggest names has some obvious benefits. However, there are also compelling reasons why boutique commercial real estate brokerage firms remain an excellent choice.
Independent brokers have some distinct advantages over their large competitors. They can do business without the bureaucracy of a large organization or corresponding conflict of interest. They can be more nimble, make swift decisions, retain local control of marketing, and push the use of new technology. When put to effective use, this agility translates into more customized solutions, responsive customer service, and a better experience.
The smaller firms, such as CRE Partners, have always taken great pride in offering personalized service and local market expertise. Digital tools now allow them to bring the same data and technology as their large counterparts. Independent firms can take advantage of CRMs, social media and other specialized digital tools to more efficiently provide clients with the information they need. You don’t have to be at a major firm to use and directly benefit from these tools.
The path commercial real estate success is not necessarily the size of the firm – hard work, innovation, integrity and true market knowledge are more important. For business and property owners looking for more from their commercial real estate broker, do your research. The best in any market are not hard to identify and what you find might just surprise you. Don’t count out the local Minnesota commercial real estate experts!