struggling with a depressed office market and
a dampening of real estate development overall. Some development is still getting done,
however. A new 126,580 square foot Target
at the Shoppes at Fox River opened this year,
along with a 61,000 square-foot Pick ‘N Save.
Construction of the 275,000 square foot 8200
Tower at Normandale Lake Office Park in
Bloomington was also recently completed.
Still, many developers in the area complain
that new development is having a hard time
finding equity sources and construction is
coming to a crawl.
“Money is on the sidelines,” said Bill Levy,
CPM®, CEO of Madison, Wis.-based student
housing management company BMOC, Inc.
“Meanwhile, investors and developers are hold-
ing on to their properties longer than they tra-
Minnesota is experiencing a similar squeeze
on new development financing, but some
projects are still getting done in the area. In
Hopkins, Minn., phase three of the 255,000
square foot built-to-suit Excelsior Crossings
office campus is under construction. Also
under construction is phase one of the 110,000
square foot built-to-suit Crest Ridge Corporate
Center in Minnetonka.
“What’s occurring here are long-term build-to-suit leases which are getting financing,” said
Bill Katter, a vice president for commercial real
estate developer United Properties.
At around 9 percent back in May 2009, the
unemployment rate in Minneapolis/St. Paul
was nearly double that of late 2008. As a result,
Katter believes the real estate market will continue to be plagued by distress until 2011. But
United Properties’ sister company, NorthMarq,
which provides property management services,
has been seeing healthy business due to foreclosures and receiverships.
“Large properties need experienced property
managers,” Katter said. “Commercial projects— 30,000 square feet or greater [are where]
you need professionals. We’re still getting calls
for these assignments.”
Statewide unemployment in Indiana reached
10. 6 percent in May 2009, higher than the
national average but improved to 9. 9 percent in
August. High unemployment, along with lagging consumer spending, has resulted in very
little new construction in the region.
“Big box spaces are empty as retailers close
stores because people are terrified of losing
their jobs and are saving their money,” said Biff
Ruttenberg, co-founder of real estate consult-
ing firm, Atlas Partners. “Manufacturing in the
area is in the dumps and financial services are
cutting people. General business conditions are
poor, so demand for office space is off, also.”
Despite the down market conditions, Atlas
recently acted as real estate advisors to PVC
Compounders in the sale of its manufacturing
facilities in Texas and Kendallville, Ind. While
Ruttenberg also believes that it may well be
2011 before overall economic conditions turn
upward, he thinks the industrial market has
not been hit as hard and will rebound first, fol-
lowed by retail and then office as employment
typically is the lagging factor in a recovery.
“Until unemployment figures start dropping
and spending increases, we won’t see much
activity in office anytime soon,” Ruttenberg
said. “If you can’t sell widgets, you don’t need
widget office space.” n
8200 TOWER AT
PARK, A 275,000