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Wednesday, August 28, 2019
Kraus-Anderson wraps up $12.5 million church expansion
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| Submitted rendering: CREO Design Collaborative / Minneapolis-based Kraus-Anderson recently put the finishing touches on this 50,000-square-foot expansion of the Mount Olivet Lutheran Church’s West Campus in Victoria. |
The project, located at 7150 Rolling Acres Road, includes a 50,000-square-foot addition to the existing West Campus to meet the needs of Mount Olivet’s growing congregation, according to a press release.
Designed by CREO Design Collaborative, the expansion houses new classrooms, a rehearsal hall, youth center, interior winter garden area and a new deck facing the lake.
Kraus-Anderson has a relationship with Mount Olivet dating back to the l940s.
Previously, Kraus-Anderson worked on multiple projects at four of Mount Olivet’s Minnesota campuses, including Mount Olivet Lutheran Church and Mount Olivet Careview Home in Minneapolis, Rolling Acres campus in Victoria and Cathedral of the Pines in Lutsen.
Last year, Kraus-Anderson wrapped up a $6.6 million addition to the campus of Mount Olivet Lutheran Church in Minneapolis.
--Brian Johnson
Water Works project underway
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| Submitted image: HGA Architects / The future Water Works Park Pavilion will feature the limestone walls of the original mill building both inside and out. |
Staff Writer
Planning the construction of Minneapolis’ newest waterfront park included more than a few educated guesses.
“It was very complicated trying to design a new building when the old building we were working with was half-buried,” Minneapolis Park Board project manager Kate Lamers said Wednesday during a tour of the eponymous mill ruins in Mill Ruins Park, which extends along the Mississippi Riverfront around the south end of the Stone Arch Bridge.
Mill Ruins Park is the future home of the Water Works, a plan to build a two-story pavilion and restaurant, outdoor terrace and grand staircase in and around several long-abandoned flour mill buildings.
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| Staff photo: William Morris / Minneapolis Park and Recreation Superintendent Al Bangoura speaks Wednesday in front of the former Bassett Mill building in Mill Ruins Park. Construction has begun on a future pavilion and restaurant built in the shell of the former mill. |
The Water Works Park Pavilion will incorporate the walls and surviving ceilings of the Bassett Mill when complete, with the uncovered limestone walls once more visible from the river. The site also has long been significant to Minnesota’s Native American tribes, and the city is eager to see those centuries of history incorporated in the new site, Park and Recreation Superintendent Al Bangoura said.
“You can trace the history of Minneapolis from this spot where we stand today, from timber mills to flour mills to the iconic attraction that it is today, where people live, work and play,” he said.
The city is partnering with The Sioux Chef for the pavilion’s restaurant. Owamni: An Indigenous Kitchen is expected to open in spring 2021, while the rest of the pavilion will open in fall 2020.
The Water Works is one prong of the larger RiverFirst initiative, an effort by the Minneapolis Parks Foundation to revitalize 11 miles of riverfront in downtown and north Minneapolis. The city expects to break ground this fall on a new river overlook on 26th Avenue North this fall, and other park and trail improvements running the length of the north Minneapolis waterfront are planned to follow. The foundation has set a $17.9 million fundraising goal for the entire campaign.
The city is long overdue to activate its waterfront, Mayor Jacob Frey said, especially right next to the central business district.
“When you can look a quarter-mile [east] and a quarter-mile upstream and see maybe five people, then you know we have some work to do,” Frey said.
A second phase of work at Mill Ruins Park will bring improvements to the waterfront areas between West River Parkway and the river. That work will kick off in 2021.
“This is the vision for a space that’s going to be teeming with people,” Park Board District 4 Commissioner Jono Cowgill said. “It’s no longer going to be a throughway for cars, but it’s going to be a place where all people, all modes, can stop and gather and celebrate the incredible falls we have right behind us.”
HU Construction is the lead contractor for the project, which was designed by HGA Architects and Engineers and Damon Farber Landscape Architects.
Report: Renter demand outpaces construction
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| Submitted photo: Doran Cos. / Suburban luxury apartments, like the Reserve at Arbor Lakes in Maple Grove, are able to charge high rents and are popular with Twin Cities residents, according to the latest Apartment Trends report. |
Staff Writer
Brisk demand for Twin Cities apartments outstripped builders’ ability to open more units during the first half of 2019, keeping the metro’s average vacancy rate on a downtrend, at least for now.
Renters signed leases for a net of 3,690 apartments in the first six months of the year, staying ahead of 2,464 unit openings, according to the mid-year Apartment Trends report from Minneapolis-based Marquette Advisors. The leasing activity drove the Twin Cities apartment vacancy rate down from 2.6% percent at the end March to 2.3%, which is in line with a 2.2% rate one year ago. A 5% vacancy rate is considered a balanced market.
But the metro market is on track for a huge influx of new supply during the final six months of the year, according to the report. Developers will likely open an additional 4,000 new apartments before the end of 2019. Marquette Advisors has estimated that Twin Cities developers will build about 13,000 apartments between 2019 and 2020.
Apartment construction should remain robust for the foreseeable future, though not at the record rate seen in 2019, said Herb Tousley, director of real estate programs at the University of St. Thomas. Investors are still willing to put their money into new apartment projects, he said in a Wednesday interview.
“For good projects, there is still money out there that is at record low rates,” he said. “They’re not seeing a big slowdown.”
Finance & Commerce’s online Twin Cities Apartment Development Tracker shows that since 2011, at least 110,859 units have been proposed, completed, scrapped or are under construction.
The imbalance between supply and renter demand came with “strong” rent growth in most portions of the metro market. The suburbs led with average year-over-year rent growth of 8.5% while the largest single apartment submarket, downtown Minneapolis, saw rents grow 3.2%.
The highest percentage of year-over-year rent growth in the Twin Cities during the second quarter was in New Hope, where the average rent grew 20.7 percent, from $857 to $1,034. The city was one of several suburbs where apartment rents grew by double digits over the past year. East Minneapolis had the second-highest rent growth rate, hitting 20 percent, according to the report.
Tousley cautioned that some suburbs that have only recently started to get their share of new, market-rate apartments could show outsized rent gains. New Hope had seen little new apartment activity until recently, when Minneapolis developer Alatus LLC completed a luxury, 183-unit apartment complex at 8400 Bass Lake Road.
New suburban apartments have proven popular, with renters showing “a positive response to new upscale apartments in several suburban markets, including … suburbs which have not seen any new apartment development in several years,” the Apartment Trends report says.
None of the Twin Cities suburbs, cities or submarkets surveyed by Marquette Advisors showed negative rent growth during the second quarter.
Developers have not pulled back on apartments, although some of the largest proposed projects have been revised in the past year. St. Louis Park-based Bader Development recently retooled its plan to add more than 700 apartments to the Calhoun Towers property near Minneapolis’ Uptown, deleting one of two proposed towers and proposing a larger, single tower.
Doran Cos. and CSM Corp. early this summer removed a 30-story tower from their redevelopment of 311 Second St. SE and 215 Fifth Ave. SE in Minneapolis. The city rejected the two-tower plan, so the developers proposed a set of six-story buildings and revised the total number of units from 800 to 575. However, in suburban Maple Grove, Doran is on its way to building 700 apartments at the Reserve at Arbor Lakes at 11650 Arbor Lakes Parkway N.
The Apartment Trends report tracks a total of 57 Twin Cities submarkets.
Affordable housing rehab gets a boost from county
By Brian Johnson
Staff Writer With an assist from Hennepin County, a Utah-based developer that targets “underperforming assets in stable or improving locations” plans to acquire and rehab a 223-unit affordable housing development in north Minneapolis.
The Hennepin County Board agreed Tuesday to issue up to $28.8 million in multifamily housing revenue bonds for DeSola Capital’s estimated $45 million project. With a primary address of 1121 12th Ave. N., the complex includes a 12-story building, three 3-story buildings and surface parking. Other funding sources include 4 percent low-income housing tax credits and developer equity, according to the county.
DeSola Capital, doing business as Parkview Apartment Associates LP, declined to comment. But DeSola’s website says the developer seeks out “challenges presented by tired, worn, mismanaged or underperforming assets in stable or improving locations that have the potential for solid, reliable cash flow and appreciation.”
The developer is expected to close on financing this fall and complete the rehabilitation over the following 12 to 15 months, Hennepin County communications specialist Kyle Mianulli said in an email.
The project, which includes one- and two-bedroom apartments, addresses a big need for affordable housing, Mianulli said. It includes a commitment to keep the units affordable for at least 30 years.
All but one of the units will be affordable for households at or below 50% of area median income and the remaining unit will be for households at or below 60% AMI, according to the county.
As established by U.S. Housing and Urban Development guidelines, 50% AMI in Hennepin County equates to $35,000 for a one-person household or $50,000 for a four-person household. The range for 60% AMI is $42,000 to $60,000.
Roughly 60,000 households in Hennepin County are between 30% and 50% AMI. Of those, 25,225 households are paying more than 30% of their income toward housing costs, and 14,665, are paying more than 50%, according to the county.
“Housing affordable at this level is in high-demand in the metro area, yet there are relatively few existing units to meet the demand,” Mianulli said.
Spencer Agnew, Hennepin County’s principal planning analyst, said rehab of existing affordable units makes sense in part because it’s very challenging to develop new housing at that level of affordability.
“It typically requires a lot of subsidies,” he said.
Built in 1972, the apartment complex needs rehabilitation to remain “in good condition for another 30 or 40 years,” Agnew said.
The rehab includes bathroom renovations and replacement of roofs, siding, windows, kitchen cabinets, counters, appliances, and flooring, among other things, Agnew said.
The bonding from Hennepin County’s Housing and Redevelopment Authority is not paid for through tax revenue, but is “repayable from revenues pledged by the borrower,” Mianulli said.
Housing revenue bonds are available to the Hennepin County HRA to “fund eligible projects that are determined to be in the public interest, including the development and/or rehabilitation of affordable housing,” according to a county staff report.
The Hennepin County HRA has issued $158.6 million in conduit financing since 2000. That encompasses seven projects supporting 1,066 affordable housing units, the county said.
Including DeSola’s project, another five projects have obtained preliminary or final approval from the county for future issuance. Those projects represent $170.8 million in revenue bonds and 752 affordable housing units.
Just Sold: Harbor Freight Tools store sells for $4.15 million
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| Submitted photo: CoStar / A new Harbor Freight Tools store at 11727 Ulysses Lane NE in Blaine has sold for $4.15 million in cash to a private buyer making a 1031 exchange investment. |
By Anne Bretts
Special to Finance & Commerce
Plymouth-based HJ Development has completed a Harbor Freight Tools retail store in Blaine and sold it for $4.15 million in cash to a private buyer seeking a 1031 exchange investment.
Campbell Properties LP of Minneapolis closed Aug. 20 on the acquisition from Blaine HFT 2018 LLC, an HJ Development entity. The 16,225-square-foot building, which opened in April, is located at 11727 Ulysses Lane NE. The 1.45-acre site is part of North Central Commons, a retail area around the intersection of Highway 65 and 117th Avenue. The area includes a Lowe’s and a Walmart Supercenter. The seller bought the site for $600,000 in 2018. The store opened in April, making it the retailer’s 11th location in the state.
Tom Fritz of Stan Johnson Co. in Chicago listed the property for $4.42 million, with a 6 percent cap rate. The final sale price works out to $255.78 per square foot. Keith Sturm of Upland Real Estate Group Inc. in Minneapolis represented the buyer.
“We had multiple offers,” said Chris Moe, vice president of leasing & development and one of the HJ Development’s owners. The company has a Twin Cities portfolio of more than 1.6 million square feet of retail, office and industrial properties, but this is the company’s first project for Harbor Freight, Moe said.
Harbor Freight was founded in 1977 in Calabasas, California, as a mail-order hardware company. Today, Harbor Freight is a discount tool and equipment retailer with more than 1,000 stores and 17,000 employees.
Keith Sturm said his client was attracted to the store’s highly visible location and its 15-year net lease.
Purchase price: $4.15 million cash, part of a 1031 exchange
Price per square foot: $255.78
Last sale: Lot acquired for $600,000 in 2018
Date of deed: 8-20-19
ECRV released: 8-22-19
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| Submitted photo: CoStar / 10801 France Ave. S., Bloomington |
Glacier Yellowstone Apartments sell for $3.45 million
Description: Glacier Yellowstone Apartments, with 30 Class C units in two low-rise buildings built in 1964 on 2.24 acres at 10801 France Ave. S. in Bloomington
Buyer: Akins Glacier Yellowstone LLC, an entity with the same address as Premier Properties, Edina
Seller: Alouise Associates LLP, Lakeville
Purchase price: $3.45 million with no down payment listed and a new mortgage
Price per unit: $115,000
The transaction: An entity whose address is the same as Edina-based Premier Properties in Edina has paid $3.45 million for the 30-unit Glacier Yellowstone Apartments at 10801 France Ave. S. in Bloomington. Akins Glacier Yellowstone LLC closed July 26 on the acquisition from Alouise Associates, a private owner in Lakeville, according to CoStar.
The building is a mix of one studio, 12 one-bedroom units and 17 two-bedroom units, from 578 to 825 square feet in size, with rents from $595 to $1,050 per month, according to CoStar.
The price works out to $115,000 per unit.
The average sales price per unit for apartments in the Twin Cities metro area is $123,586, according to the Finance & Commerce Apartment Sales Tracker at finance-commerce.com. The tracker has recorded the sale of 54,734 apartment units since Aug. 31, 2011
Last sale: N/A
Date of deed: 7-26-19
ECRV released: 8-12-19
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| Submitted photo: CoStar / 1515-1549 S. Fifth Ave., South St. Paul |
New owner revives South St. Paul retail center
Description: 5th Ave Plaza, a 41,846-square-foot neighborhood retail center built in 1960 on 2.77 acres at 1515-1549 S. Fifth Ave. in South St. Paul
Buyer: Lodge Properties LLC, Stillwater
Seller: Fifth Ave Shopping Ctr LP, Hopkins
Purchase price: $1.375 million
Price per square foot: $32.86
The transaction: When Tony Lodge signed a $1.375 million contract for deed in 2018 for 5th Ave Plaza, vacancies totaled 75 percent of the 59-year-old retail strip center at 1515-1549 S. Fifth Ave. in South St. Paul.
Lodge Properties LLC in Stillwater made the acquisition from Fifth Ave Shopping Ctr LP, an investor in Hopkins.
At first, luring tenants was tough, Lodge said.
“I had buckets catching rainwater as we were walking through,” he said.
When Lodge paid off the $1.375 million contract Aug. 19, however, he had 75 percent of the space leased.
It was the first time Lodge, a general contractor, had taken on a commercial property of his own, but he soon found a day care operator to take a vacant 10,000-square-foot day care for a new facility for 150 kids. A dance company took 7,000 square feet. An outpatient treatment program took a spot.
Peking Café and Vicki’s hair salon, both of whom have been there for decades, agreed to stay.
“Somehow, they saw my vision,” he said.
Today, the buckets are gone, the roof is fixed, the contract is paid off, and Lodge is working on filling the final spaces in the center.
Last sale: N/A
Date of deed: 8-19-19
ECRV released: 8-22-19
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