It's a well-known industry axiom: "Commercial follows Residential." And, with commercial real estate (CRE) inventory at one of the lowest levels we've seen in years, this principle holds true again today. Anyone who has searched the CRE databases over the past few months will quickly find it's tough to identify good quality product in our market right now. While the multifamily market has been dealing with a public inventory drought over the past six years, the same now holds true for office, retail, industrial, and urban land properties.
On top of low inventory and continued historically low interest rates, the Twin Cities has an abundant CRE buyer pool, both local and national, competing for properties. It can be a challenge for the professional investor or 1031 tax exchange client, but the owner-user searching for a new place to locate their business can really feel the pain. There is a tremendous amount of capital chasing deals today and the 'cheap' CRE inventory (under $500k - $1M), is nearly non-existent in our core metro areas. Cap rates remain compressed on quality NNN assets, if you can find them. This CRE environment creates an even bigger "insider" marketplace where more deals are trading off-market and if you're not in-the-know, you've got nowhere to go.
Mark Huls
ey
RE/MAX Results – Commercial Group
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New to Our Group - Welcome Brokers!
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Hugh Byrne, CCIM
Hugh joins us from The Ackerberg Group out of Minneapolis. He has enjoyed a successful career of over 30 years in the commercial real estate industry and continues to provide top notch expertise to clients. Welcome Hugh!
Hugh@resultscommercial.com
Mobile: 612.834.1559
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Matt Michalski
Matt joins us out of the University of St. Thomas - Opus College of Business. He has been part of RE/MAX Results - Commercial Group for nearly a year serving in a business development role while transitioning to becoming a broker. Welcome Matt!
Matt@resultscommercial.com
Mobile:651.356.2521
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2124 Dupont Ave S, Minneapolis, MN
Sold! Uptown Mixed Use. 22 Offices + Apartment. Hit the market on 5/8/2017. Purchase Agreement Received: 5/28/2017. Successfully closed with 1st Qualified Buyer. Check it out in Finance & Commerce
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6613 Penn Ave S, Richfield, MN
Sold to Dentist! Excellent stand-alone retail in centralized Richfield location. Former Bridgewater Bank location. Zoned MU-C (Mixed Use Community).
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Land: $702,000
429 West Lake Street, Minneapolis, MN
SOLD! Uptown Land Sold to CPM Companies for a Mixed-Use Development! Sold for $77,000 above list price with Multiple Offers. Formerly a used car sales lot – Amundson Uptown Auto.
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Mixed-Use: Retail + Apts: $860,000
670 7th Street West, St. Paul, MN
SOLD! 9 Unit Mixed-Use Stable Investment with Great Cash Flow. 4 Apartments upstairs with 3 main level retail/office spaces and 2 lower level office/retail spaces.
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Net Lease Investments (NNN)
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Shopko: $7,746,268
405 Cottonwood Dr, Winona, MN
Sold!
7.8% cap Rate.
Shopko focuses on a select product range across US small and rural areas. The company operates more than 320 stores, including about 135 Shopko discount stores and about 180 Shopko Hometown shops in more than 20 states.
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MGM Wine & Spirits: $1,962,054.
Sold! ~7.5% Cap Rate. MGM Wine & Spirits – Single Tenant NNN Investment with 12 years remaining on the lease. Buyer Rep deal. High Profile West St. Paul Location.
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Walgreen’s: $6,818,181
Pending! 5.5% cap rate. 14,580 Square Feet. 18 years remaining on lease. Absolute NNN Lease. #17 on Fortune 500 list.
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Builders First Source: $3,356,962
Sold! 7.9% cap rate.106,080 square foot Industrial building! NNN Investment Sale. Property: Builder’s First Source located 19401 Tamarack St NW, Oak Grove, MN. Tenant’s revenue is over $3.5 Billion annually.
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Due Diligence: Do or Die
Due diligence is the comprehensive investigation and examination of a property or asset prior to acquisition. The due diligence period is one of the contingency periods outlined in the Letter of Intent (LOI) or Purchase Sales Agreement (PSA). Proper due diligence on a commercial deal is critically fundamental and if not done properly, can cost the buyer much more than the property itself.
Commercial real estate due diligence is extensive and complicated. Requirements vary between product classes (land vs office) and due diligence requirements are often defined by the lender, as well as the buyer. Common CRE due diligence includes full physical property & systems inspections, certified or ALTA survey, verification of zoning uses, environmental (Phase I or II) and geotechnical reports, title restrictions, wetland delineation, permit & licensing approvals, tenancy issues, and much more. Missing just one component of due diligence can be extraordinarily risky for a buyer unless they fully understand the potential future liabilities.
On the other hand, there are times when discounted cash-only AS-IS, WHERE-IS deals, auctions, or bank-owned (OREO) assets have purchase parameters that do not make traditional due diligence easy or even possible. This is when each critical due diligence item must be considered in a worst-case scenario and then, quantify the risks & potential costs as best as possible prior to making the offer. These types of deals naturally come with high risk and should not be entered into by buyers or brokers without fully understanding the ramifications.
When it comes to managing the due diligence process for CRE deals, it takes an experienced broker and counsel to navigate the waters. Due diligence is one of those areas where "you don't know, what you don't know." And, that's like playing with fire.
Mark Hulsey
RE/MAX Results - Commercial Group
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Office/Retail For Sale
653 Grand Ave, Saint Paul, MN
$699,000 - O
ffice/Retail located in Excellent Grand Ave location between Dale & St. Albans. Perfect owner/user opportunity. ~4,784 total square feet with ~3,520 finished square feet.
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Animal Hospital/Vet Clinic For Sale
2255 7th Avenue E, Saint Paul, MN
$1,150,000 - Just reduced by $100,000! Excellent Animal Hospital/Vet Clinic designed by Pope Associates and built by Kraus-Anderson in 2002. For Sale or Lease. Additional land available on-site for expansion to gain an extra 8,975 SF. Current building is 5,942 SF. Perfect for Medical Office or Child Care/School user.
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West Metro Office Building For Sale
12700 Anderson Lakes Pkwy, Eden Prairie, MN
$1,200,000 - 12,606 SF freestanding office building conveniently located in Eden Prairie. Excellent owner-user opportunity. Serene setting with ample parking including 6 garage spaces. Vaulted ceilings in many offices and hallways
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4 Office Condos For Sale
7525 Mitchell Road, Eden Prairie
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N
$695,000 - Multiple contiguous office condos with 5,214 SF available at Bent Creek Business Center in convenient Eden Prairie location. All 4 units are turn-key ready with nice finishes. Perfect opportunity for an investor for a lease-back with very solid tenant and strong ROI with a ~8% Cap Rate (traditional NNN lease-back).
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The Point Retail
10603-10629 France Ave South, Bloomington,
$18/SF/Year NNN. The P
oint is a strong mixed use retail-office building that includes a combination of both national and independent retailers/medical groups. The center is positioned at the highly traveled intersection of Old Shakopee Road and France Avenue in a very dense area of Bloomington. Currently available is a 1,588 SF space that was formerly occupied by a salon, a 1,699 SF endcap space that was formerly occupied by a pizza restaurant and with the largest space available is 2,281 SF
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Office & Retail
501 Washington Ave South, Minneapolis
$14/SF/Year NNN. Cre
ative Office/Retail Space Available at a landmark location on Washington Ave S in downtown Minneapolis. 8,396 SF available and sub-dividable to 3,500 SF. Third floor former fitness space features large windows and high ceilings in a well maintained building, renovated in 2003. Close proximity to Downtown, North Loop and University of Minnesota campus and steps away from Downtown East Development, Stone Arch Bridge, Gold Medal Park and Guthrie Theater.
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Edinburgh Retail and Shopping Center
8505-8545 Edinburgh Center Dr N, Brooklyn Park, MN
Join Caribou Coffee, Fat Nat’s Eggs, Dairy Queen in a high traffic center. Located in the city of Brooklyn Park. Immediately north of downtown Minneapolis. Retail mix includes both national and regional tenants. Mature residential community. Located by Highway 252 and 85th Ave N. Retail center is final addition to 22,000 retail development. Highway signage available.
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Mound Marketplace Retail
2131-2195 Commerce Boulevard, Mound, MN – Mound Marketplace
Established neighborhood center with an excellent blend of retailers providing daily goods and services. 3 Suites available: 1,597 SF up to 2,985 SF. Ample on-site parking. Great visibility and adjacent to the Transit Center. Monument and building signage available. Landlord will build-to-suit or offer TI allowance. Major Tenants include: Jubilee Foods, Carbone’s, Subway, and Great Clips.
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Did You Know?
This video is worth a quick review. In a couple of minutes, you'll discover the depth of the RE/MAX Commercial network around the globe.
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See What You've Been Missing...
If you want to know what's going on in the commercial real estate world locally and nationally, please connect with us. An excellent mix of CRE headlines, property & development activity, market trends, a first look at pre-market and off-market properties, and more. See what you've been missing.
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RE/MAX Results - Commercial Group
A Full-Service Commercial & Investment Real Estate Brokerage Group
Acquisition | Disposition | Leasing
RE/MAX Results - Commercial Group is a Division of RE/MAX Results.
Each Office Independently Owned and Operated.
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