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INFORMATION
<br /> 6 CityBusiness August 15,1997
<br /> JOHN NOL-
<br /> .•
<br /> fearsIndustrial space ,,„, -„,_,,,,.±,,
<br /> buildup
<br /> J
<br /> REAL ESTATE When's it going to stop? Specter of'80s bust has some ne11141 ,
<br /> rvous ��,
<br /> i''''' 1
<br /> By Dirk DeYoung However, he added, the safer thing that's going to slow the market'''' 1 11 I
<br /> Sall reporter build-to-suit market is still very down is going to be a slowdown in t
<br /> Jittery brokers, watching the mar- strong. labor supply." But the continued I, yx
<br /> ket441.
<br /> race upward at breathtaking speed Steven - Hoyt, owner of migration of workers into the area and1p4,003
<br /> •
<br /> while investors continue to pump in Minneapolis-based Hoyt Properties a diversified economy mean growth, , - u ;
<br /> mob.
<br /> more money,are starting to fret about Inc.,believes the entire industrial mar- will continue,DeVries said' ,
<br /> a downturn,or at least a slowdown. ket is excellent and there's little Anew midyear report released,by r '
<br /> Today's news from Wall Street, chance of an '80s-like bust. "The Bloomington-based United Properties
<br /> perhaps? demand is there and I think the Bevel- appears to agree with the optimists, ---
<br /> Try the industrial real estate market opens are keeping a lot shorter leash citing rising rental rates for ' • t •1, ; #
<br /> in the Twin Cities. on it than they were the other time property."Several developersarsm ; '
<br /> Developers built slightly more than around the track," he said. "We ing the rates on new projectso" r. '
<br /> IA
<br /> 4 million square feet of industrial remember the problems of the '80s those they quoted on similar ,• '-. , .,
<br /> space in the Twin Cities in the 12 and I think we'rea lot more careful developed only months before `#+ ..
<br /> months ending April 30,with tenants about developing purely speculative report said. , .- ,V '
<br /> absorbing more than 3.4 million projects and letting things get out of But ed only
<br /> aver a first vice presi- •" i 1
<br /> square feet according to the annual hand." dent at Bloomington-based C13i
<br /> update compiled by the Minnesota In the 1980s,a lot of small"hobby Commercial,believes there is a slow�4, u 4
<br /> Chapter of the National Association of developers"got into the mix, adding INDUSTRIAL to page 3
<br /> 414*
<br /> tnal and Office Properties to.the oversupply problem Hoyt said. a .4 sa t
<br /> P). Also,there's a big difference between _ p
<br /> illt as another 6.4 million square "planned"projects and projects where , ._ _. c 1,;!,u1,,,,,.,
<br /> . t 446
<br /> feet is either under construction or "someone has stuck a spade in the = - 1 `� ,
<br /> planned for this year, people in the ground." The southwest sector has lii a 171 II I /�
<br /> industry are starting to wring their John DeVries,a senior man• ager in million square feet of lindustrl-�
<br /> hands a bit worrying if and when all Arthur Andersen's real estate services al development planned or , 3 ``
<br /> under construction in sites' -`7‘.711:,-;":-.'
<br /> �•. i
<br /> the new warehouses and showrooms group in Chicago,agreed that builders such as Shakopee's Valley 'T
<br /> will lead to a bust similar to the one are generally more prudent today than- Green Business Park
<br /> the market experienced in the late in the 1980s.Much of the new con
<br /> 1980s. struction •is being done by national
<br /> "Everyone is wondering when it's firms that are using better marketing '
<br /> going to slow down," said Mike intelligence to make development
<br /> Meents, with Minneapolis-based decisions."These real estate decisionsW r � ,
<br /> Towle Financial Services Midwest aren't local decisions anymore," said
<br /> Inc. "At this point, lenders haven't Louis Suski of Wayzata-based A....,...--'
<br /> really been concerned about all the American Industrial Properties, who ` NOW ■ - "- s . , ,
<br /> space going on line.That may change will talk about the potential for over- }
<br /> next year if space doesn't lease upas building at NAIOP's Minneapolis 1 s# f l
<br /> fast as it's been going." chapter meeting on Tuesday morning. ;.ems 3F
<br /> Industrial development is a differ- "Overall, it looks like the �_ s " * _
<br /> ent animal from office and retail space Minneapolis market is very much in �-- - r`r 4 ""
<br /> 3.,,,,,.,1,,,_,
<br /> t '.,
<br /> because it canbe built very quickly balance," he continued. "The only —� .,_ --� �` - j : r
<br /> with little investment, and conse-
<br /> quently,the market can overheat very Industrial building is still booming
<br /> quendy,theetas and others said."It's
<br /> also fairly easy to slow it down,"
<br /> Meents added Region 1946 construction* Absorption* Under construction " Planned for 1997
<br /> Another risk is that a lot of the new
<br /> ,'Res &'NW 938,427 622064 803200 - 963,100
<br /> development is built on spec,meaning Y =3Mpls&No 1,064,649 1,080,732 276,215 :; 508,600
<br /> that tenants aren't signed until the
<br /> building is under construction. St.Paul/Mid way/East Metro 718,420 , 250,230 0 806,950
<br /> Developers, however, really have no E :Bloomington&South- • •753,041 788,632" 866,866 -_ 406,000
<br /> choice,Meents said."The market has :.Southwest 551,600 • 676256 491,000_ 1,324,000
<br /> not responded to proposed projects as r- Total squarefootage - .4,026,377 3,424,894 2,437,681 - 4,006,650
<br /> jahrhey want to see that it's actual- "
<br /> giptg done." t allrou8h AprA 30 I997 Source NLnnesota Chapter,Naoonol Assodanon of Industrial and OJ{ice Properties
<br /> HEALTH CARE But Tar et Stores certain ractice will continue example,"Piro Baia.
<br /> Haze g p The issue, one source said, is cal
<br /> employer make it more expensive for
<br /> By John Manning Rowayton, Conn., office of Hewitt hep who are at a higher risk of ha
<br /> Saff reporter Associates said the law allows for discounts health-care problems to buy shays
<br /> �a� �� �.ww coverage? If the eovernment says I
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