|
United Properties Feature: Upsides of Upgrading
<br />Northwest developers pull trigger
<br />As vacancies continue dropping, the Northwest is seeing strong demand for development. Five
<br />projects are under construction, totaling 386,973 sq. ft. Opus is developing a 150,000-sq.-ft. facility
<br />for Select Comfort at Bass Creek Corporate Center in Plymouth.
<br />Also under construction by McGough Development is a 150,000-sq.-ft. "green" building in Maple
<br />Grove for Great Lakes Energy Development.
<br />"Land is still available in Maple Grove, which continues to lead this submarket's leasing activity and
<br />new construction," says Greg McMillan, United Properties senior office brokerage associate. "Nearly
<br />half the new construction underway is in Maple Grove. There's also land available in Brooklyn Park.
<br />The Highway 610 corridor, running through the northern metro, will drive future development." Class
<br />A net rates are averaging $16-$17. New construction demands rates in the $19-$20 range.
<br />St. Paul may see project
<br />Despite high vacancies, a potential downtown St. Paul office development was reported for a vacant
<br />parking lot at 415 Wabasha St. Dean D. Johnson, a St. Paul native and partner with Brussels,
<br />Belgium-based WingField Corp., reportedly purchased the site where the Wabasha Court office
<br />building once stood and plans to develop mixed-use, including office, hotel and retail.
<br />SouthJAirport remains solid
<br />The South/Airport is the smallest office submarket, but developers are not overlooking this very stable
<br />market. It boasts the lowest vacancy of 11.3%; Class A is 8.8%.
<br />Two new buildings were completed in first-quarter 2007: the 90,000-sq.-ft. Grand Oak X by Interstate
<br />Partners in Eagan, and the 40,000-sq.-ft. Mendota Place by United Properties in Mendota Heights.
<br />Underway is the 30,000-sq.-ft. Centre Pointe VII in Eagan by Roseville Properties.
<br />--
<br />' K ~~-~
<br />Renderin of Mendota Place
<br />In addition, 1.9 million square feet is in preliminary stages, including 1 million square feet of
<br />speculative office space as part of McGough's Bloomington Central Station.
<br />'There's continuing tenant demand, but it's a small submarket," Gleason says. "I expect the market to
<br />continue to tighten, but I don't believe we will see any more speculative development this year. Any
<br />new project will probably need a 50,000-sq.-ft. tenant before breaking ground, and that's a large
<br />transaction in this submarket."
<br />Northeast is strong
<br />The Northeast submarket boasts 208,005 sq. ft. under construction and 855,205 sq. ft. proposed.
<br />Woodbury and Lake Elmo lead development.
<br />'The Woodbury market became really tight in 2006," says Tom Stella, United Properties vice
<br />president -office brokerage. "You couldn't even find 3,500 sq. ft. Subsequently, developers pulled the
<br />trigger, so now there will be some vacancy, but absorption as well. Most Northeast leases are new to
<br />the submarket, so it'll be true absorption."
<br />Projects underway include Welsh's 95,000-sq.-ft. Oakdale Tech Center, United Properties' 40,000-sq.-
<br />ft. Eagle Point Office Park Phase III in Lake Elmo, MSP Commercial Management's 53,500-sq.-ft. City
<br />Centre Professional in Woodbury and Commercial Equity Partners' Tamarack Hills in Woodbury. Also,
<br />Keller Williams will anchor MSP's 35,000-sq.-ft. North Central Professional Center in Roseville."
<br />'There are not many quality blocks of space larger than 50,000 sq. ft.," Stella says. 'This submarket,
<br />like many others, is well-positioned for development."
<br />Page 4 of 5
<br />http://outlook.uproperties.com/features/2007/2007Apri1_RaceForSpace.htm 5/11/2007
<br />
|