The University of St. Thomas

Kraus-Anderson Construction Company (KA) Completes $73 Million High School in Alexandria, MN

The beginning of the 2014-15 school year couldn’t be any better for the Alexandria School District in Alexandria, MN. Just in time, Kraus-Anderson Construction Company (KA) has completed a $73 million and 280,000-square-foot senior high school for the district.

The new high school commons (Source:

The new high school commons (Source:

Designed by Cuningham Group Architects to be a flexible learning environment, the new high school will house 1,400 students and replace the district’s Jefferson High School which was initially built in 1957. Speaking of flexibility, Trevor Peterson, director of business services for the district, adds “Not knowing what education is going to look like five years from now or 15 years from now, we needed to make the building adaptable”.

Published on: Wednesday, September 10th, 2014

Minneapolis Has Already Surpassed the 1 Million Mark in Construction Projects for 2014

Based on “the total valuation of building permits in Minneapolis since 2000” posted by Star Tribune, as of August 14, 2014, Minneapolis already surpassed the $1 billion mark in construction projects for this year. With $1.211 billion in construction projects so far, the city just exceeded the $1 billion mark for the third consecutive time since 2000. About half of this year’s total valuation so far came from the construction of Vikings Stadium ($241 million) and Downtown East apartments and office tours located on 550 S 4th Street, 600 S 4th Street, 510 S 4th Street, and 640 S 4th Street (All valued at $219 million).

Architects rendering of 'Downtown East' - development on Star Tribune site, next to new Vikings stadium " gameday aerial view' (Source: Star Tribune)

Architects rendering of ‘Downtown East’ – development on Star Tribune site, next to new Vikings stadium
” gameday aerial view’ (Source: Star Tribune)


Published on: Wednesday, August 20th, 2014

We Remember 2011 Minnesota Real Estate Hall of Fame Inductee, Robert Leonard Hoffman

Robert Leonard Hoffman, a 2011 Minnesota Real Estate Hall of Fame Inductee, died on July 29, 2014 at the age of 85. Co-founder of the Larkin, Hoffman, Daly & Lindgren law firm and described as “the dean of Twin Cities land-use lawyers”, Hoffman crucially contributed in notable real estate projects such as the development of the Mall of America. He also proudly served his community as a Bloomington city councilman for 14 years and on the Metropolitan council for 7 years.

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Published on: Wednesday, August 6th, 2014

Eagan Outlet Center to Feature Snow Melter

The new Twin Cities Premium Outlets center opening in Eagan next month will feature a unique piece of equipment to help manage snow in the winter. Rather than store snow on site or pay to have it hauled away, the property will use a stationary snow melter made by Trecan, a Canadian company which specializes in the design and manufacture of the machines. With capacity to melt 40 tons of snow an hour, the snow melter will help the property management keep the center’s sidewalks and 1,400 parking spaces accessible to customers during the winter months.

The snow melter at the new Twin Cities Premium Outlets in Eagan (source: MSP Business Journal)

The Trecan snow melter at the new Twin Cities Premium Outlets in Eagan (source: MSP Business Journal)

The Trecan machine melts snow that is dumped in by plows by mixing it with hot water heated by a natural gas burner. The snow melt then drains directly to the municipal storm sewer. A filter collects trash and other debris before it enters the sewer.

The Twin Cities Premium Outlet will be (surprisingly) the first shopping center in Minnesota to feature an on-site snow melter. It will also be the first in Simon Property Group’s portfolio of 300 shopping centers worldwide, although the company also plans to install one in a Montreal mall opening later this year.

By using the snow melter, Simon hopes to keep operating costs lower for tenants. The machine can melt 200 cubic yards of snow per hour at a cost of about $110, substantially less than the cost for haul away and off-site disposal of a comparable amount of snow. Additionally, because the property won’t need space for snow mounds the developer was able to build fewer parking spaces and keep more of them available for customers during the winter months.

The 409,000-square-foot outlet mall is set to open Aug. 14th and will have more than 100 stores. It was developed by Simon Property Group and Paragon Outlet Partners.

Published on: Thursday, July 24th, 2014

Target Corporation Opening Its First Mini-Store, TargetExpress

With more young people choosing cities over suburbs, Target Corporation announced early this year its new small-scale concept, TargetExpress, which is going to open in Dinkytown (Minneapolis, MN). Despites the challenging previous year marked by a difficult Canadian expansion and data breach, Target Corp. kept its ambitious plans by now responding to the recent American housing trend through this TargetExpress concept. Even though its competitor Walmart already adopted this small-format store concept with “Walmart Express” about 3 years ago, Target still has some rooms of opportunity in this progressing housing trend in the U.S. Regarding this matter, the Time magazine even recently stated “The New American Dream Is Living in a City, Not Owning a House in the Suburbs”.

 A rendering of a TargetExpress store, a smaller version of sprawling suburban Target stores that is geared for city dwellers (Source: The New York Times)

A rendering of a TargetExpress store, a smaller version of sprawling suburban Target stores that is geared for city dwellers (Source: The New York Times)

Unlike its typical stores, CityTarget (80,000 to 125,000 square feet) and SuperTarget (about 174,000 square feet), this new concept is a 20,000-square-foot store. Its strategic location of Dinkytown, precisely in the newly-built Marshall apartment building, will help better target young people such as the University of Minnesota students. With the 2014-2015 academic year starting in early September and TargetExpress debuting July 23, college students living nearby or planning to do so will get a chance to buy items such as home decor or consumer electronics not only in a more convenient way, but also before school starts.

Published on: Thursday, July 10th, 2014

US Existing-Home Sales in May 2014: Largest Monthly Percentage Gain Since August 2011

On Monday, June 23, National Association of Realtors (NAR) Chief Economist Lawrence Yun reported that US existing-home sales in May were outstandingly up by 4.9% to an annual rate of 4.89 million units. That monthly percentage gain not only exceeded expectations, but also was the highest since August 2011. RBS Markets chief U.S. economist Michelle Girard welcomed the good news by saying “The long-awaited spring bounce in home sales looks to have finally appeared”.

The National Association of Realtors also added that May’s total housing inventory rose 2.2% to 2.28 million existing homes available for sale, thus making it 6% higher than a year ago. Stephanie Karol from IHS Global Insight responded to this May’s sales and inventory improvement by stating “As long as sellers feel assured of making a profit, they will feel emboldened to list their homes; and as buyers feel they have a good selection of well-located properties to choose from, they will continue to look and bid”.

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Nevertheless, during May, the market seemed to remain difficult for buyers with modest financial resources as they experienced a 27% decline of their share of sales, down 2 percentage points from April and from April 2013.

Published on: Thursday, June 26th, 2014

Impact of Surface-Restoration Business on Commercial Properties

A book may not be judged by its cover but when it comes to commercial properties, their image really matters as emphasized by in a recent article. While businesses and property owners are trying to cut their expenses in today’s economy, they cannot remain indifferent about their building surfaces that are getting deteriorated. Also, it is in the best interest of building owners to give a good first impression to their potential tenants through appealing exterior spaces.


Concrete stairs before restoration … (Source:


… and after (Source:

The surface-restoration business offers an economical solution to commercial buildings owners who cannot repeatedly afford the high cost of hiring a company to come replace surfaces degraded by the weather, the sun, and even road salt. Speaking of saving money through surface restoration instead of replacement, Minnesota-based Twin Cities Outdoor Services shares an interesting information about their business. According to the company, services offered by its Surface Restoration Division can help businesses and building owners save up to 70 percent of the money that would be spent for surface replacement done by another company.

To clarify the advantage of surface restoration over replacement, Kai Milota, director of sales with Plymouth, Minn.-based Twin Cities Outdoor Services, states “In a retail environment, if you replace concrete, if you’re ripping out materials, you might have to shut your doors for some time. With restoration that doesn’t have to happen. It’s less disruptive on business and customer traffic.”

Published on: Tuesday, June 10th, 2014

Walgreens Considering Flagship Store for Downtown Minneapolis

The MSP Business Journal recently broke the news that Walgreens is considering adding a “flagship” store on Nicollet Mall in downtown Minneapolis. The news come off the heels of the announcement that Saks Off 5th will close its current downtown Minneapolis location when its lease expires next January. United Properties hopes that a Walgreens flagship store could absorb part of that space when it is vacated.

Walgreens Flagship Store in Chicago (Source: MSP Business Journal)

The move would add to Walgreen’s growing portfolio of flagship locations, which have more upscale finishes, wider variety of retail offerings, and different layouts than its typical stores. The flagship locations are all located in dense urban areas, with stores already open in Chicago, Boston, L.A., D.C., and Philadelphia. While formats vary, most feature expanded food offerings such as juice bars, grab-and-go sandwiches & sushi, and self-serve froyo. Some stores even sell beer and liquor where allowed by local law.

In an interview with NPR, Walgreens Vice President Beth Stiller said that the flagship stores are somewhat of a Read the rest of this entry »

Published on: Friday, June 6th, 2014

Building Owners Brace for Tall Order: One Way to Measure Space

 Reposted fron a Wall Street Journal article that apperred on May 27th

Ilona Billington

The MetLife building used to be listed at 2.4 million square feet. Now it is listed at 3 million square feet. Getty Images

Coalition Plans to Announce Measurement System in June

One of the biggest complaints of office tenants is that building owners throughout the world use different systems for measuring how many square feet or square meters tenants are leasing, deviating as much as 24% from one another.

Now an international coalition of real-estate organizations formed last year is hoping to change that. The International Property Measurement Standards Coalition in June plans to announce a single measurement system for the global office market.

“The current situation on measuring standards is totally unacceptable,” said Ken Creighton, chair of the coalition’s board of trustees.

But whether or not building owners adopt or ignore the standards remains to be seen. The coalition doesn’t have the clout to require owners to follow its standards and many landlords don’t want to change their current systems, which can mean millions of dollars in extra rent.

For some building owners, adopting a new measurement standard would mean that their building would shrink in size and lose value. “There is a risk that some firms may be sitting on balance sheets that are actually worth significantly less when measured by a common standard,” said Scott McMillan, chief of real estate at the International Monetary Fund.

For many, the debate might seem surprising. After all, landlords throughout the world are governed by the same laws of physics.

But they use widely different systems for measuring space and this affects rents, which typically are charged on a price-per-square-foot or price-per-square-meter basis.

For example, for a space that measures 10,000 square meters (108,000 square feet), some landlords will simply charge rent based on that amount. But most will increase the size by some factor depending on what formula they use for apportioning public space in the building—lobbies, bathrooms, hallways—to tenants.

Landlords also vary in whether they begin their measurement from inside or outside an exterior wall. Some begin measurements at their building’s farthest extremity, like the nose of a gargoyle.

In some cities, including New York, landlords generally have increased loss factors over the years. For example, in 1979, architectural guides listed the Pan Am Building at 2.4 million square feet. Today the tower, which has been renamed the MetLife Building, is listed at 3 million square feet.

Tenants say consistent standards are greatly needed. “I would have preferred this to have happened five years ago, but better now than in five or 10 years’ time,” said Billy Davidson, group property director of Vodafone. VOD.LN 0.00% Vodafone Group PLC U.K.: London GBp209.50 0.00 0.00% May 30, 2014 4:38 pm Volume : 63.70M P/E Ratio 0.01 Market Cap GBp55.39 Billion Dividend Yield 7.13% Rev. per Employee GBp420,129 05/29/14 Vodafone to Meet With Indian O… 05/27/14 FCC Could Use Merger Concessio… 05/22/14 Why is Vodafone Flogging a Net… More quote details and news » VOD.LN in Your Value Your Change Short position “This is the right thing to do.”

The Standards Coalition was formed in 2013 by a group of international property organizations including the Royal Institution of Chartered Surveyors in the U.K., the Building Owners and Managers Association in the U.S. and the International Monetary Fund. The move was partly in response to increasing pressure from large global tenants that are frustrated by the numerous measurement systems.

A group of 18 experts representing 11 countries have been working on the standards. Proposed standards have been circulating for comment among real-estate professionals for months.

Coalition members expect the standards to be controversial. “In any initiative in standardization there will inevitably be winners and losers,” said Marc Mogull, an executive with the investment firm Benson Elliot who also is a member of the Royal Institution of Chartered Surveyors.

There is also the question of implementation. Building owners will have to voluntarily accept the new standards and it isn’t clear how many will do so, especially if it could mean a financial loss.

Many real-estate executives in New York are skeptical that new standards will change the minds of the city’s landlords. “It’s an important enough market that they can make their own rules,” said Mark Weiss, vice chairman of Newmark Grubb Knight Frank.

But tenants could put pressure on building owners to accept standards by avoiding properties that don’t. “I need the confidence from my suppliers to know when they give me comparable details that it’s really comparable,” said Vodafone’s Mr. Davidson. “With [the new standards] I can say that I won’t consider your building unless you show me the measurements based on these standards.”

Some government agencies say they will help pressure owners to accept the standards. One such agency is Dubai’s Land Department, according to Mohamad Al-Dah, a senior director. “From our own point of view we don’t have very fair standards in Dubai, but once the Land department begins using it, we will encourage businesses in Dubai to adopt it,” he said.

Write to Ilona Billington at


Published on: Tuesday, June 3rd, 2014

Minneapolis / St. Paul Housing Market Sending Mixed Signals

St. Thomas real estate analysis for April: Mixed signals as second quarter begins

 Researchers at the university’s Shenehon Center for Real Estate report that inventory is up and rates are down, but other factors are not quite as positive.

 Market ReportAs the second quarter of 2014 begins, the housing market in the Twin Cities continues to show mixed signals according to the Shenehon Center for Real Estate at the University of St. Thomas. Single family housing starts rebounded in April, but year-to-date numbers remain barely ahead of last year at this time. Mortgage rates have touched a seven-month low, but the volume of closed sales remains below last year’s levels. Median sale prices overall have increased but the median sale price of a non-distressed home in the Twin Cities has decreased compared to April 2013. The news is not all bad, according to Herb Tousley, director of real estate programs at the university. The inventory of homes for sale has increased, the number of new listings has increased sharply, and the percentage of distressed sales and new foreclosures continues to fall.

home-for-sale Existing-home sales

“In April we observed something that we have not seen in over two years,” said Tousley. While overall median sale prices for all sale categories in the Twin Cities metro increased moderately compared to last April, the median sale price of non-distressed homes sold in April of 2014 was actually slightly less than the median sale price in April 2013.  “If this phenomenon were to continue into the late spring and summer months we will have to seriously reexamine our expectations of price increases for non-distressed homes for the remainder of the year,” said Tousley. On a positive note, the number of closed sales was down compared to a year ago. However, the decrease was mainly due to a reduction in the number of distressed sales as traditional non-distressed sales were up slightly compared to a year ago. The change in the proportion of non-distressed sales is also reflected in the fact that the percentage of distressed sales dropped from 26.8 percent in March to 21.1 percent in April. In comparison, the April 2013 the percentage of distressed sales was 31.5 percent. “We expect the percentage of distressed sales to continue to moderate, falling below 20 percent in the second quarter of 2014,” said Tousley.

 The inventory of existing homes for sale is improving slightly. At the end of April there were 14,675 homes for sale. This is a 3.25 percent increase over the number of homes available in April 2013. This is the second month in a row and the first time since the summer of 2012 that there has been a year over year increase in the number of homes for sale. Another encouraging sign is the number of new listings increased sharply this month, according to Tousley. In April there were 7,777 new listings, which is a 19.7 percent increase from March and is 10.2 percent higher than March of 2013. “This is a healthy development as a continued increase in the number of homes for sale will lead to a better balance between the supply of homes for sale and the demand in the market,” said Tousley. 

New-home construction

During April of 2014, the number of single-family home permits reported by Keystone Report increased significantly over both the March and April 2013 levels. In April, single-family home permits were up 37.5 percent. “This verifies our expectation that the spring construction season will see a flurry of new construction activity as home builders seek to make up for time lost due to harsh weather conditions in January and February,” said Tousley. Year to date the number of single family permits is only up .65 percent compared to the same period in 2013. Look for the year to date increase in permitted single family homes to improve as the construction season moves into its peak months this summer, according to Tousley. 


Mortgage rates have decreased to the lowest rates seen in the last seven months.  The 30-year-fixed rate is near 4.2 percent and the 15 year rate is less than 3.5 percent. Recently the federal regulators have instructed Fannie Mae and Freddie Mac to direct their focus to making more credit available to more homeowners. That is a major change in direction from previous directives to pull back from the mortgage market. Policymakers at the Federal Reserve have expressed worries that the housing sector, which in the past has been a key driver of an economic recovery, is struggling to shift into a higher gear. They are also concerned that first time home buyers will be unable enter the housing market due to high levels of student debt. Expectations are that in order to sustain the economic recovery mortgage rates may not increase as much this year as was originally expected, according to Tousley. “Originally, rates were expected to increase to around 5 percent by year end,” he said. “However, if the recovery begins to falter during the year, rates may not increase by quite that much.”

The UST Indexes

The UST Traditional Sale Composite Index continued its upward trend in April, moving from 1,005 in March to 1,021 in March—a 1.6 percent increase. The index is 1.2 percent above the level recorded in April 2013.

The UST Residential Real Estate Short Sale Composite Market Health Index was 887 in April, up 23 points from the 864 recorded in March—a 10.05 percent increase compared to one year ago.

 The foreclosure market’s health as represented by the UST Residential Real Estate Foreclosure Composite Index increased in April, moving from 738 in March to 757 in April, an increase of 2.5 percent. The index remains 3.7 percent higher when compared to March 2013.


More information online

The Shenehon Center’s charts and report for April can be found at:


Published on: Friday, May 30th, 2014