The commercial real estate market is heating up in the Twin Cities area, according to a recent report by the Star Tribune. In addition to the improving economy, tough markets in bigger cities are reportedly driving investors into Minneapolis and St. Paul.
According to the report, updated industrial buildings, Class A office space in downtown Minneapolis and multifamily projects are among the most desirable investments here in the Twin Cities at the moment; however, the multiple tenant office market has actually decreased in the first half of 2013.
Retail centers anchored by big box stores are also proving attractive. When Gaviidae 1 in Minneapolis was recently sold, it reportedly had a number of bids on the table. The center, anchored by Saks Fifth Avenue Off 5th, ultimately went for $26.5 million.
In the suburbs, on a national level, there has not been as much investment interest and this has been attributed to the current urban trend. Many young people not only want to live in urban areas, but they also want to work in urban areas.
Not only are young professionals flocking to city centers, however, so too are recent empty-nesters and--at the opposite end of the spectrum--those who are putting off buying first homes. This trend has helped the rental property market in the Twin Cities.
As the commercial real estate market continues to gain ground here in the Twin Cities, there will likely be more first-time investors coming onto the scene. Whether an investor is new to commercial real estate or not, it is important to recognize that commercial real estate is far more complicated than residential real estate.
There are a number of things to examine--from environmental compliance and zoning issues, required disclosures, pending litigation, existing leases, pending evictions, taxes and more. It is important that commercial real estate buyers and sellers ensure that they protect their legal and financial interests by exercising due diligence.
Source: Star Tribune, "Investors bullish on real estate projects in Minneapolis, St. Paul," Janet Moore, July 31, 2013