Should You Use a Broker? Or Go At It Alone?

What should you look for when touring commercial real estate? Yes, the proposed space is important, but consider these other factors.

Parking
With SF/person going down, does this building have enough parking? View tenant parking areas and compare it to the buildings occupancy. If the parking is full and only 80% of the building is full, you know you are in for some issues.

Natural Light
Don’t underestimate the need for sunlight. Getting cheap space with limited natural light may seem like a cost savings, but it will hurt you in the long run. Talented employees generally want assess to light as it will improve satisfaction with the job, increase productivity and help with overall health.

CAM
When comparing CAM, be very leary of the least expensive option. In the long run, not maintaining the property correctly will come back to bite you. Look for buildings with reasonable CAM, as they may provide additional amenities that may ultimately save you money (fitness centers, shared conference rooms, less SF)

I often get asked “How are things going in the Commercial Real Estate market“? This is a tough question to answer. Yes, many people and many aspects of CRE is doing very well. However, a dark cloud is growing in the distance as the apartment building boom continues, institutional grade investment prices rise, and cap rates compress. My opinion is that we are nearing or already in a bubble…and I am not alone. U.S. Bancorp CEO Richard Davis “wants to hold the line on how much exposure the bank has to a market that he says often carries too much risk”. The key in this statement is too much risk with returns not justifying that risk. Low interest rates and a flood of cash being pumped into the system have made commercial real estate look attractive compared with bonds and other assets and have “drawn comparisons to the delirious boom of the mid-2000s” (Source WSJ). So where do we go from here? I don’t the answer. All I know is, we very rarely learn from past mistakes.

Oh how things have changed. It is finally good times for everyone involved with Industrial Real Estate in Minneapolis/St Paul. Over the last 12 months, there has been almost 2,000,000 SF absorbed in the overall market. Even with that surge in demand, vacancy rates have remained flat as developers were ahead of the curve and had a number of new speculative properties ready to accommodate new tenants.

Will this torrid pace continue? Developers, investors and brokers sure hope it will, but we do expect this going into 2016. We do expect the industrial real estate market to remain healthy and the following trends to continue:

•  rental rates increasing
• cap rates lowering/flattening
• significant influx of investment capital looking at every available portfolio
• development community will continue building, filling, and selling their developments.

If you are in need of additional warehouse space, we can help. Please contact us today!

There was a recent article in the Twin Cities Business magazine describing the Minneapolis North Loop Office Market as one of the top growing office submarkets for tech companies in the US. This growth has caused rental rates to increase by over 20% in the last two years alone. This make sense as companies try to retain & attract talent by having well located, creative office space. This area will continue to grow through the development of new housing options and spec office buildings. If you are a growing tech company and would like to research office space in the North Loop, give a call today!

We have all been there, so here is a quick laugh before you walking into your next pitch!