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!
Should You Use a Broker? Or Go At It Alone?
It really depends on whether or not you rather spend your time on your business or searching for space. There are many considerations when deciding if you are going to move, add another location, or just stay put. Why should consider using a Minneapolis Tenant Representation Broker?
In a recent Inc. Magazine article, commercial real estate & office space was a significant conversation. One of the best quotes from this: “When you have a separate location, there’s an initial upfront cost, but there’s also overhead you take on by having to communicate between multiple locations. ALSO, ONE THING I THINK A LOT OF SMALL BUSINESSES DON’T REALIZE IS THAT LOOKING FOR A NEW OFFICE IS A HUGE TIME SUCK. We were running out of space, and it took us more than six months to find another office.” (Inc. Magazine; Jerry Hum)
Bottom line, it takes a lot of time out of your day for more important tasks. That is why we are here to help!
Take advantage of our ability to streamline the space search, our market knowledge, our negotiating skills, and our ability to manage the transaction to SAVE YOU TIME & MONEY.
Commercial Real Estate Market Update Q3 2016
As 2016 comes to an end and the deep freeze arrives (I already feel like I need a warm weather vacation), 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 1,000,000 SF of space in the third quarter of 2016. Vacancy rates continue their downward trajectory and have fallen to approximately 7% in the metro area. However, a quick look at development trends suggest 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 Tenant & Buyers? Fewer choices and increased pricing. The biggest challenge for tenants today is finding ONE space that meets their needs. The one exception: Rogers & Dayton. If you need 50,000 SF or more in that market, you could get a very good deal.
The outlook for office market is following the same path. Office space in the North Loop remains 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 work spaces that include fewer private offices, more open space and buildings with worker-friendly amenities.
If you are looking to lease or buy, let us provide you with a free market analysis. We look forward to the opportunity to work with you on your next real estate project. Give us a call today!
What You Should Know About HVAC
It really depends on whether or not you sign a gross lease or a net lease. Typically in a net lease, tenants are responsible for the maintenance of their HVAC units. Some leases, depending on how they are written, will also make the tenant responsible for replacing the unit. Before you enter into a lease, fully understand whether it’s a net lease or a gross lease. If it’s a net lease, make sure the unit is in good working order and find out when it was most recently replaced.