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Please enjoy our September edition of E-News.
Our feature story on the Warehouse District market demonstrates yet another sector where we continue to see a drop in vacancy, with an appeal to a unique tenant base. In this issue, you will also find our featured specialist and recent brokerage transaction updates.
We are pleased to have the opportunity to share our research and market information with you. As always, we are here to assist you with any of your commercial real estate needs.
Warm Regards,
Jeff LaFavre, CCIM, MCR, SIOR
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Warehouse District Update
By Jim Mayland, Research Manager
The Minneapolis Warehouse District is a geographical area that has rough borders from Hennepin Avenue to Plymouth Avenue and from 7th Street North to the Mississippi River. For the purpose of this article, we will be referring to the Warehouse District as a definition of buildings that would make the tour list for a creative user. Generally, these buildings are rehabbed warehouse office buildings with exposed brick and timber, ceilings, and mechanical systems.
Over the past several years the Warehouse District properties have kept pace with the declining vacancy of the Class A office market and in the past few quarters, actually out-paced the Class A market.
One way that we measure this vacancy is by the number of competitive spaces available in the market. This graph shows the number of spaces that can accommodate a user at several different sizes. In every category, there has been a negative change or no change in the amount of spaces available. The increase in contiguous spaces between 20,000-40,000 sf from 2006 to 2007 is a bit misleading. This increase was a direct result of leasing that took place at Bassett Creek and the Lumber Exchange Building. Both buildings had blocks of space over 40,000sf in 2006 but leased portions of them during the year. Again, a sign of positive absorption and increasing demand in the market place.
Not surprisingly, the Warehouse District buildings have seen overwhelming positive absorption over the past several quarters. We expect this to continue for several more months as many businesses in the Warehouse District are growing at 5-10% and more significant buildings are being converted to other uses that will pour increased demand into the market place. Those buildings are: the Ford Centre and the Northwestern Building.
The Warehouse District properties have become a target for the more creative industries, such as architectural, marketing, and internet firms. The Warehouse District is especially appealing to companies that would like to be located downtown, but cannot support high rent and high cost of parking that CBD buildings have.
The Warehouse District properties have increasingly become a sought-after product type in the past two years. Absorption is up. Vacancy is down. With reasonable rents, proximity to the downtown CBD, and dwindling blocks of space, the outlook is very positive for continued growth and vitality in the Warehouse District.
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Peter J. Dufour, CCIM
Pete Dufour joined the Colliers Office Sales and Leasing division in 2005. He serves as a Vice President with Colliers, where he specializes in office services, tenant and landlord representation in St. Paul and the East Metro area. Prior to joining Colliers, Pete was Director of Leasing with Wellington Management. Pete has worked on the Riverview Business Plaza redevelopment representing 200,000 square feet. He was also responsible for City Centre Plaza and City Centre East developments in Woodbury, MN which cover more than 115,000 square feet of office and retail space.
Currently, Pete is the exclusive leasing agent for Gallery Professional Building, US Bank Center, Drake Building, and Brown & Bigelow to name a few, and he has completed $24 million in transaction volume within the last 20 months.
Pete is a graduate of Metropolitan State University, with a BS in Accounting and is a Certified Commercial Investment Member (CCIM). He is also an active member of CCIM and BOMA.
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Colliers Completes $1.8 Million Sale of Rum River Plaza in Ramsey
 RAMSEY—(August 30, 2007)—Matthew Klein, a senior associate in Colliers’ Investment Services division, represented Twin Cities-based Rum River Plaza Associates in the $1.8 million sale of Rum River Plaza to Rum River Retail Ventures, LLC, also based in the Twin Cities.
Rum River Plaza, located at 5900 167th Avenue Northwest in Ramsey, Minn., is a neighborhood retail center with nearly 28,000-square feet of rentable space.
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Colliers Represents Innoflex Corporation in Lease Extension
NEW HOPE—(September 17, 2007)—Ronald R. Scholder, SIOR, vice president with Colliers’ Industrial Sales and Leasing division, represented Minneapolis-based Innoflex Corporation in its lease extension at the Louisiana Distribution Center, located at 7101 31st Avenue N. in New Hope, Minn., and owned by San Francisco-based AMB Property Corporation.
Innoflex, which occupies 72,731-square feet of the 150,000-square foot building has been a tenant of the Louisiana Distribution Center since 2001. With the new lease, Innoflex will remain a tenant through 2015.
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Colliers Signs Healtheast to Lease at Gallery Building
 ST. PAUL—(September, 2007)—Peter Dufour, CCIM represented Triple Net Properties Realty, Inc. in the lease of 14,262 square feet of medical office space, located in the Gallery Professional Building in downtown St. Paul, valued at $2.6 million to Healtheast.
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