Buyers Facing Aggressive Competition for Hotels

After a record year in 2015, the Minneapolis/St. Paul hotel market is highly active. Many buyers and institutions are continuing to aggressively seek existing product and land for hotel development. With the competitive environment in Minneapolis/St. Paul and other larger markets in the region, buyers and developers continue to seek out opportunities in secondary and tertiary markets.

According to Ronn Thomas of Cushman & Wakefield NorthMarq, “The continued demand for quality assets is causing owners to contemplate selling. Sales expectations are high for the second half of the year.”

For more details on the Twin Cities Hotel market, subscribe to the Compass Report.

Ronn Thomas is a Senior Director in the Capital Markets Hospitality Group.

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Developers Still Seeking Industrial Land

By way of industrial land, most of the prime business parks are developer controlled or owned at this point in the cycle. While many developers are more comfortable with the land positions and inventory they possess, a select group are still looking for well-located sites.

According to Noam Newman of Cushman & Wakefield NorthMarq, “With users such as Star Exhibits, Wagner Spray Tech and Americsource Bergen leaving multi-tenant buildings for build-to-suits and thus creating additional vacancy, we anticipate more of a developer focus on build-to-suit construction rather than speculative multi-tenant buildings.”

For more details on the Twin Cities Land market, subscribe to the Compass Report.

Noam Newman is a Senior Associate in Brokerage Services.

Be sure to follow our ongoing “Compass Bites” series on Twitter, LinkedIn and Facebook which offers bite-sized trends and insights stemming from the Compass Report.

Check out our short video on highlights from the recent Compass Report. To watch, visit Cushman & Wakefield NorthMarq’s Vimeo or YouTube channels or visit the Compass website.

Demand Outpaces Supply of Investment Sales

Heading into the second half of 2016, The Twin Cities continues to be a target market for a deep field of investors, both institutional and private. It is still viewed very favorably but as less of a growth market than in previous years.

According to Scott Pollock of Cushman & Wakefield NorthMarq, “Based on current activity we are bullish about second half sales volumes for office and industrial and expect a strong finish to 2016.”

Looking ahead, interest rates are expected to remain stable with any increases likely to be minor and less impactful on values.

For more details on the Twin Cities Investment Sales market, subscribe to the Compass Report.

Scott Pollock is an Executive Director in the Capital Markets Group.

Be sure to follow our ongoing “Compass Bites” series on Twitter, LinkedIn and Facebook which offers bite-sized trends and insights stemming from the Compass Report.

Check out our short video on highlights from the recent Compass Report. To watch, visit Cushman & Wakefield NorthMarq’s Vimeo or YouTube channels or visit the Compass website.

Multi-Family Continues to Fire on All Cylinders

Overall, market fundamentals remained healthy. Investor activity has increased significantly in the first half of the year.

With 3,100 units delivered in 2015 and an estimated 3,900 units to be completed this year, at what point will supply outpace demand? The pipeline has close to 4,000 units so the question remains: How many of those will actually come to fruition? Builders will continue to follow the vacancy rate and rental rate trends.

In the past few years construction has been focused on the urban core. Now, over half of the development is slated to occur in the suburbs. The market has absorbed new construction and experienced rising rents, yet the vacancy rate has remained steady over the last five years.

Cushman & Wakefield/NorthMarq’s Robert Dulin shares his insight looking ahead to year-end, “The Minneapolis multi-family market is poised for another record breaking year. We expect the 2016 total sale volume to eclipse the $1 billion mark for the first time, depending on timing of closings. This velocity has been fueled by low interest rates, strong demand from local and national buyers and continued confidence in the Twin Cities market.”

For more details on the Twin Cities multi-family market, subscribe to the Compass Report.

Robert Dulin is an Associate with the Capital Markets Group.

Be sure to follow our ongoing “Compass Bites” series on Twitter, LinkedIn and Facebook which offers bited-sized trends and insights stemming from the Compass Report.

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Retail Market Healthy Despite Lack of Available Quality Space and Rising Rates

The Twin Cities retail market remained competitive in the first half of the year and retailers continued to expand. Most of the growth was in national or chain retailers, particularly discount stores. Due to high start-up costs and historically high rents, activity for local “mom and pop” retailers stagnated. With the minimum wage and sick pay laws pending, some retailers are stalling on making real estate decisions.

Despite some market challenges, prime neighborhoods continued to flourish. According to Cushman & Wakefield/NorthMarq’s Andrea Christenson, “Northeast Minneapolis is on fire. St. Paul CBD, Downtown East and North Loop are hot too. Uptown remains active but has competition from St. Louis Park and other rising neighborhoods, putting pressure on retailers.”

Looking ahead to the end of the year, there is still no large scale retail development on the horizon. Small shop space remains scarce and rents are expected to continue trending upward. For more details on the Twin Cities retail market, subscribe to the Compass Report.

Andrea Christenson is a Senior Director with Retail Brokerage Services.

Be sure to follow our ongoing “Compass Bites” series on Twitter, LinkedIn and Facebook which offers bite-sized trends and insights stemming from the Compass Report.

Check out our short video on highlights from the recent Compass Report. To watch, visit Cushman & Wakefield/NorthMarq’s Vimeo or YouTube channels or visit the Compass website.