Last week the Minnesota Business Journal reported, Lutsen Resort, a staple of Minnesota tourism for over 125 years, went on the market for just under 10 million dollars. However, it is not the first resort in the Great North to go on the market recently. The Star Tribune reports Gunflint Lodge sold for over 6 million dollars and Superior Shores and Resort, just south of Lutsen, in Two Harbors is also currently on the market.
Is this a trend? Why are resorts going on the market? Should consumers be worried about their options for North Shore leisure?
Herb Tousley, of the University of St. Thomas’ Shenehon Center for Real Estate, commented that these resorts often times require a “hands-on” approach to management of the site. He also noted, “due to this approach, many owners see the opportunity to sell, in what they perceive to be, a high value market in order to exit the business.”
Statistics from the U.S. Travel Association show that domestic leisure travel is up from 2 billion trips in 2007 to 2.28 billion trips reported in 2016. More specifically, the Minnesota average household income has returned to pre-recession levels at $79,893. The private sector employment numbers (FRED) also seem to indicate the economy is in relatively good health. These indicators are great for resorts and the hospitality industry in general. Even with the ominous question of, “are we due for an economic adjustment?” It is not a predictable event. From general market signs, a resort may be an investment for some leisure.
Shenehon Center for Real Estate has been enabled Graduate level Business and an Undergraduate Major program in real estate for more than 15 years. The University of St. Thomas is dedicated to creating leaders who are morally responsible, think critically, act wisely, and work skillfully to advance the common good.
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)
Nicollet Mall demands the highest office rents in Minneapolis, but it’s cheap compared to some streets in bigger cities.
Here is an interesting article that was recently written by Burl Gilyard from Twin Cities Business
The IDS Center on Nicollet Mall
October 1, 2013
Local boosters often tout that the Twin Cities ranks high on many lifestyle surveys.
But the metro area ranks nowhere near the top in a new survey from Chicago-based Jones Lang LaSalle, a commercial real estate services firm, which tallies the “most expensive streets” across the United States based on the cost of leasing office space. Nicollet Mall in downtown Minneapolis ranked as the 25th-most expensive street in America in 2013, according to Jones Lang LaSalle.
The most expensive street in the country is Sand Hill Road in Menlo Park, California. The gross rent per square foot along Sand Hill Road, an area known as the home of many venture capital companies, is $110.76 per square foot. Fifth Avenue in New York City ranks as the second-most expensive with an average rate of $102.02 per square foot.
Both high-priced avenues are more than three times as expensive as the priciest rents along Nicollet Mall in Minneapolis, which averages a gross rental rate of $30.60 per square foot, according to Jones Lang LaSalle.
The Jones Lang LaSalle survey noted: “Midwestern markets remain the most affordable.”
The numbers are based on asking rents, which might differ from the actual rent received, as of the second quarter of 2013. Gross rent per square foot includes the net rental rate, plus operating costs and taxes.
Abel Balwierz, a senior research analyst with Jones Lang LaSalle, said that Nicollet Mall is home to some high-profile trophy office properties. But another key factor is the corporate headquarters of retailer Target Corporation at the south end of the Nicollet Mall. Balwierz said that Target likes to have vendors located within just a few minutes walking distance from its corporate offices.
“Target vendors are the main type of tenant that’s interested in space along Nicollet Mall,” Balwierz said, noting that other tenants include law firms and financial services groups.
“Target, I think, has a big influence on the downtown market,” said Jim Vos, a principal with Cresa Minneapolis, a tenant representation firm.
The top-tier office space in downtown Minneapolis is performing better than the overall market, which remains a mixed bag.
A mid-year survey from Bloomington-based commercial real estate services firm Cushman & Wakefield/NorthMarq found the Class A office vacancy rate was 10.7 percent in downtown Minneapolis at the end of the second quarter, the lowest office rate for any class of office space across the metro. At the same time, Cushman & Wakefield/NorthMarq reported that the overall office vacancy rate across the Twin Cities remained high at 17.5 percent.
The 23rd Annual Business Valuation Conference will be held Wednesday, February 6. This conference covers topics of interest to attorneys, accountants, business brokers, business owners, commercial real estate brokers, lenders, investment bankers, appraisers and others who regularly encounter business valuation issues. It is held at the University of St. Thomas campus in downtown Minneapolis and is presented/sponsored by The UST Shenehon Center for Real Estate, NCCIBA, NACVA, ASA.
Topics featured at the conference include:
- Economic Update
- The Layman’s Use of Regression Analysis
- Identifying Metrics and Calculating Value in Excel
- Basics of a Real Estate Appraisal
- Avoiding the Pitfalls When Valuing Machinery & Equipment
- Understanding Minimum Compensation in Eminent Domain
- When is it Time to Call in the Experts?
- Current Court Decisions
This conference has been approved for eight hours of real estate and appraiser continuing education through the Minnesota Department of Commerce.
Whether you are looking for ways to position Minnesota as a good location to buy real estate or simply need a reminder of why we like living here next time it snows, the Greater MSP, the Minneapolis St. Paul Regional Economic Development Partnership website is a great resource. Not only do they put together videos about the highlights of the areas on their YouTube channel, they provide statistics to backup why this is a great area to do business (location, transportation, financing & incentives, demographics, taxes, utilities, innovation, the economy), to live (education, cost of living, healthy lifestyles, philanthropy and volunteerism, sports and recreation, arts and culture, shopping and attractions) and workforce information (labor force statistics and projections, wages, employment by industry and occupation, colleges and universities.)
Just a few of the reasons Minnesota is a great place to live, go to school and do business:
- #1 region to be an urban cyclist. Bicycling Magazine
- More golfers per capita than any other region in America.
- Top 4 states for workforce quality. CEO Magazine
- Among America’s top regions for brainpower. The Daily Beast, 2010
- Where you can get a good cappuccino and eat Thai food yet live on a quiet tree-lined street with a backyard and send your kids to public school. Garrison Keillor
Do you have questions about the Twin Cities commercial real estate market, valuation of commercial property, real estate finance, real estate law, development, property management, education and careers in real estate, or other industry topics?
Whether you’re a student, novice, or a seasoned industry professional, our experts are here to help! Send us your real estate questions, no matter how simple or complex, and faculty from the Master of Science in Real Estate program will respond to your questions weekly on the Real Estate Matters blog and via Twitter @USTRealEstate.
The Minnesota Real Estate Hall of Fame was established by the Shenehon Center for Real Estate at the University of St. Thomas Opus College of Business to honor leaders in the local real estate community.
A real estate leader is someone who:
- has made a significant contribution as a leader in the field of real estate.
- has impacted his or her particular area of real estate and should be recognized primarily as an exceptional role model in his or her discipline.
- has displayed the highest level of ethics in his or her business practices.
- has improved his or her community as a business leader.
Do you know someone who fits this description? Nominate them for the Minnesota Real Estate Hall of Fame. Nominations are being accepted until June 1, 2011. Each nomination will be considered for up to three selection periods.
How does one comprehend the above figure? It is a very large number with many zero’s, in fact, it’s so large even a fancy BAII+ financial calculator has to express the number as a exponent of the 10th power (11 * e^12). The name for this sum can vary depending on which country you are in, and unfortunately since the US and Britain saw fit to simply swap the names around, a trillion is 10^12 in the US, and in old english it is considered a billion (a trillion in the old system is 10^18, or a quintillion in the US). Since the definition of this figure does little to aide in the quantification of this figure, it is necessary to use tangible comparisons. 11 trillion dollar bills stacked on top of each other would be 737,000 miles high, in relation the moon is approximately 240,000 miles. Besides the United States and the European Union, 11 trillion dollars surpasses the GDP of every other nation in the world (according to the CIA fact book).
The attempt at quantifying this figure was done in the hopes of imparting the sheer magnitude of this number as well as the mind-boggling size of it, constructing a model that represents data and economic factors that are able to compute the necessary macro and micro forces affecting this figure is simply amazing. This is precisely what researchers at CoStar did in their comprehensive study of the United States commercial real estate market, with their findings and analysis published in the Journal of Real Estate Portfolio Management (JREPM). While this is undoubtably a very exciting study, there has never been a comprehensive valuation of the entire countries real estate, the data collected is far from novel. Having the ability to quantify and value one of the largest asset classes in the world (the only one larger that comes to mind is the US stock exchange at 16 trillion) will allow investors, developers, the government, and anyone else involved in commercial real estate a powerful new model for analyzing the macro effects of economic shifts on the entirety of the asset class. In recognition for their outstanding work, the authors received the best paper of 2010 by The American Real Estate Society (ARES).
The press release from CoStar is below, including a link to read the paper as published in the JREPM.
“My favorite part of the job is helping others at Shenehon succeed, by providing them the tools and support that gives them the best opportunities possible. Seeing those around me at Shenehon have success is the most rewarding aspect of my work, in the same way that a coach shares in the success of his team when they are playing to the best of their abilities.”
This is the first in a series of interviews with the movers and shakers in the real estate industry. Our first interview is with Mr. Robert Strachota, President of Shenehon Company and Co-Chair of the Real Estate advisor board at University of St. Thomas. With almost four decades of experience, Mr. Strachota was gracious enough to share some of his ideas and lessons learned over the course of his career. As the president of Shenehon Mr. Strachota has had an incredible career, here is his work bio (From Shenehon’s website):
Bob is the President of Shenehon Company. He holds both the MAI and CBA designations and has over 30 years of appraisal experience in the commercial real estate and business enterprise valuations. During that time, he has successfully completed thousands of appraisals, including some very unusual assignments such as: railroads, riverboats, ranches, resorts, etc. Bob serves as an expert witness in Federal, State, and District Courts, as well as for commission hearings and special government proceedings. He is an ad hoc professor for three degree-accredited universities and is frequently invited to speak at valuation seminars and extension courses. He acts as a court-approved arbitrator, commissioner, and magistrate in real estate and business valuation disputes. Bob holds the highest designations from the Institute of Business Appraisers and the Appraisal Institute and he publishes in both local and national trade journals.