Signs of life in Twin Cities leasing – Real Estate Matters
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Signs of life in Twin Cities leasing

Dave Jellison, UST Real Estate Advisory Board Member, interviewed in Finance & Commerce

by Burl Gilyard Staff Writer

Liberty REIT sees 138% rise in first quarter

Are companies finally letting go of fears about the economy and starting to lease space?

Dave Jellison, vice president and city manager for the local office of the Philadelphia-area Liberty Property Trust, thinks the evidence is clear.   Liberty, a large national REIT (real estate investment trust), saw its first-quarter leasing activity in the Twin Cities area jump 138 percent compared to the first quarter of 2009.   “It’s been a very good first quarter, and we still have more activity,” Jellison said on Friday morning.

Liberty announced that the firm signed 134,824 square feet of leases in the first quarter, up sharply from the 56,754 square feet in the first quarter of 2009. Jellison said that Liberty Property Trust has a local portfolio of 3.8 million square feet of office and industrial space. Jellison said that Liberty’s local properties are currently 91 percent leased.
Jellison added that Liberty is close to inking another notable lease deal.  “We’re starting to see companies that couldn’t figure out what to do next saying, ‘I think we’re at the bottom … We might as well move forward with our plans and start leasing new space’,” Jellison said. “They’re looking at the market and saying, ‘This is probably a good time to get a deal done right now.”  Liberty recent deals included four new leases, three renewals and two expansion deals.

Jellison said that brokers are getting busier these days.   “They’re seeing more people out at least kicking tires. We’re back to seeing longer-term leases again, we’re not just seeing one to two year renewals,” Jellison said. “A year ago, we weren’t getting many expansions.”  While leasing activity is up, Jellison doesn’t see the demand yet for new office buildings.   Two years ago, Liberty stopped construction of Liberty Plaza, which had been slated to be a speculative, 120,000-square-foot office building. The project is next to the former Best Buy headquarters that Liberty owns at 7075 Flying Cloud Drive in Eden Prairie. After putting in the foundation, the company pulled back due to wariness about the economy.  “We’re still on hold with that,” Jellison said of Liberty Plaza. “Until some of the vacancy gets absorbed in the marketplace, I don’t think there’s going to be demand for another building immediately. I don’t foresee us doing anything in 2010. We do have a good site, we’ve got the steel in the warehouse.”

Liberty lease deals: First quarter, 2010

•Ideal System Solutions, Inc., leased 6,000 square feet at Rowland Pond, 5610 Rowland Road, Minnetonka.

•Ecessa Corp. leased 8,031 square feet at Northwest Business Campus II, 2800 Campus Drive, Plymouth.

•The federal General Services Administration (GSA) leased 17,270 square feet at Normandale Ponds Office Park, 6161 American Boulevard, Bloomington.

•Sorin Group USA, Inc., leased 15,273 square feet at Northwest Business Campus I, 2905 Northwest Boulevard, Plymouth.

•K. Hovnanian Homes renewed its lease for 12,366 square feet at Lake Smetana A, 7615 Smetana Lane, Eden Prairie.

•Susan Hoffman Interiors renewed its lease for 5,167 square feet at Northwest Business Campus II, 2800 Campus Drive, Plymouth.

•Time Warner expanded its lease at 5450 Feltl Road, Minnetonka, adding 31,343 square feet to its existing lease of nearly 90,000 square feet.

•Sterling Commerce, Inc., signed a renewal for 15,550 square feet at PrairieView Building, 7800 Equitable Drive, Eden Prairie.

•Activision signed a renewal for 7,436 square feet at PrairieView, where the company leases more than 21,000 square feet.

Source: Liberty Property Trust

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