INFORMATION #1 08-14-2006United Properties Outlook: Boyd's Perspective
INFORMATION
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Transportation System Funding to Create New Development `Hot Zones' in Twin Cities
By Boyd Stofer, President/Chief Executive Officer, United Properties
There are, as every Twin Cities resident knows, two real seasons in the metropolitan area: winter and road construction.
Road construction season is about to become even more intense thanks to the record $1.2 billion that Minnesota is
spending on transportation work this year, following last year's then-record $1 billion worth of transportation spending.
Given that a significant portion of the state transportation funding is targeted for the Twin Cities area, it's worth taking a
closer look at what this increase in spending could mean for the future of commercial development activity in the region.
Some Cities Should Prepare for Larger-Scale Development
With so many immediate transportation improvement projects, the biggest implication for future commercial real estate
development is the effect these changes will have on smaller cities not accustomed to large-scale commercial
development. Those cities would do well to consult with city leaders from places like Eagan, Eden Prairie and Maple
Grove, where the past 10 years have been dominated by accelerated development.
Those cities that have had well-planned growth decide early how to manage their undeveloped land and create specific
plans for land use. Two common issues are where to place industrial uses and how much mixed use the city can support.
Cities may undervalue industrial development, but when located correctly, these users provide a consistent tax base and
stable employment opportunities for nearby residents. The popular mixed-use approach may not be appropriate or
feasible for each city.
Four New'HOt Zones'
Based on a the approved funding and the plans published by the Minnesota Dept. of Transportation (MNDOT) we have
identified four major "hot zones," where new transportation projects may create new opportunities for commercial real
estate development during the next few years:
• In the Northwest quadrant of the Twin Cities, work includes the construction of an interchange at the
intersection of Highways 169 and 610 and the realignment of Highway 81 where it meets Highway 610 in
Brooklyn Park. Target has announced plans to build a new office-retail complex near the intersection, which is
likely to spur additional mixed-use development. Additionallv, the new 40-mile-long Northstar Commuter Rail I
• In [he Southwest quadrant, the completion of the U.S. Highway 212 corridor through Chanhassen to the City of
Carver will have a major impact on traffic Flow in the area, with the most impact on Carver and Cologne, both
still quite rural in nature. The state is also building a new bridge across the Minnesota River at Chaska to carry
traffic on Highway 41, thereby creating greater access to "south of the river" cities such as Chaska, Shakopee,
Jordan, Belle Plaine and other points south and west. Some of these communities will see an increase in new
residential development, although industrial will continue to move to the southwest when easier access to the I-
494loop is available.
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United Properties Outlook: Boyd's Perspective
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• On the Northeast side of the Twin Cities, MNDOT is at work unknotting the confusing weave of freeway
intersections involving I-35E and I-694 in the Little Canada area. Once completed, traffic will move more freely to
the north on I-35E as well as on the east-west I-694 route, potentially spurring more development in cities such
as Lino Lakes, Hugo and Forest Lake. Industrial development will likely expand in these communities, along with
additional retail.
• In the Southeast quadrant, MNDOT is removing a major traffic bottleneck with the replacement of the Wakota
Bridge carrying I-494 over the Mississippi River. The work also involves improving the I-494 and Highway 61
interchange, which will bring more development attention to surrounding communities such as St. Paul Park,
Cottage Grove, South St. Paul, Woodbury and perhaps as far south as Hastings. Much of this land is considered
prime for industrial development, given the improved access and lower prices than some other areas.
One thing is certain: the Twin Cities transportation system is expanding outward to accommodate both increased
population growth and greater economic development. Even cities in the inner loop will likely experience change as
some commercial uses move outride the core of the metro, leaving behind opportunities for redevelopment. Citip~tl
who understand the growth prospects of the entire Twin Cities area ar
cities will be best-positioned to take advantage of these opportunities.
fopyright 2002-2006. United Properties. Ali Rights Reserved.
3500 American Boulevard West, Minneapolis, MN 55431.
Private Po1iCY ~ Contact UP ~ Download Hard Copy ~ Request Hard Copy
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swr:~:
Vacancy Spiked upward
Absorption Significant (primarily offce warehouse)
Rental Rates Creeping up
Highlights
• The Northwest ind~ atrial mar4at, consisting of 295 buildings totaling 26.7 million square feet, is dynamic. At 11.3%
vacancy (11.8% with sublease space), it boastr the lowest vacancy of all the submarketc, However, the vacancy did creep
up slightly from 10.7% at year-end 2005.
• The Northwest enjoyed substantial absorption of 256,925 sq. ft. in the first half of 2006, reporting 847,001 sq. ft. for the
past 12 months-the most positive absorption of any submarket. The vacancy increased, despite the positive absorption,
primarily because several buildings-with substantial vacancies-were added to the universe.
• ~7i,,,,cspmarket continues to be one of the healthiest in hr metro with ctrona popylatinn ,,.,,,Nrn As proof of itr health,
three speculative buildings are under construction totaling 245,000 sq. ft. and another six projects are planned; many
developers are getting ready to pull the trigger.
• Most of the new construction occurring in the Northwest is office warehouse space with 24-foot clear ceilings and 30% or
40% office finish, whereas 12 months ago it primarily saw bulk warehouse construction.
• The three buildings under construction are the 78,000-sq.-ft. 610 Business Center in the Highway 610 corridor in Brooklyn
Park being developed by Ryan Cos. US Inc. Quoted rates are $12 for office and $5.50 for warehouse space. A Nov. 1
completion date is anticipated. No leases have yet been signed.
• The 128,800-sq-ft. Minneapolis Business Center, on the border of Minneapolis and Brooklyn Center near Brookdale Mall, is
being developed by Real Estate Recycling. An Oct. 1 completion date is expected. Two leases have been signed totaling
50,000 sq. ft. Thyssen Krupp Elevator Corp. leased 25,000 sq. ft. and Synaquip leased 25,000 sq. ft.
• As for additional leasing, most of those deals in the first half of 2006 were in the 20,000- to 50,000-sq.-ft. range and most
were office warehouse. Warehouse space reported an impressive 455,043 sq. ft. of positive absorption in the first half of
2006 for a total of 671,757 sq. ft. in the past 12 months. This is the first time in two years that office warehouse has
experienced positive absorption.
• One of the largest warehouse leases was Gaines and Hanson Printing Co. taking 160,000 sq. ft. at the New Hope
Distribution Center in New Hope. (The company vacated 160,000 sq. ft. in the bulk market, however).
• Another warehouse lease was n~SpJ_ay Solutions sionina for 30 000 sq ft of office warehouse space at Boone Business
Center in Brooklyn Park. ~~~/1,LP/( ~,pK ~•v~ ~~~0 /~ ! ~~
• Bulk warehouse space reported negative 214,213 sq. ft. of absorption in the first half of the year, following the loss of
several bulk users, including Gaines and Hanson (see above).
• However, there also were a number of bulk leases completed. Creative Carton signed a lease for 72,000 sq. ft. at
Crosstown XII at 7601 Setrler Parkway North in Brooklyn Park.
• Great Northern leased 45,000 sq. ft. of bulk space at Diamond III in Rogers. The property, at 20015 Diamond Lake Road,
Is owned by Martield, Belgarde & Yaffe.
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• Wilson Leather inked a lease for 48,000 sq. ft. at Maple Grove Distribution Center.
• Deltak Corp. signed for 40,000 sq. ft. of bulk space at Berkshire Distribution Center in Plymouth. Also, Pratt Industries
signed a 100,000-sq.-ft lease at Plymouth Distribution Center in Plymouth and will take occupancy in June.
• Offce showroom space reported positive 16,095 sq. ft. and vacancy of 14.1%. The showroom market has been slow and
most deals were in the 3,000- to 10,000-sq.-ft. range. Some showroom spaces have been sitting for more than a year.
• A few notable showroom leases were completed. Gyrus Medical took 26,000 sq. ft. at Wedgwood Commerce Center VIII in
Maple Grove. Atari leased 17,000 sq. ft. of office showroom space at Northwest Pointe Business Center in Plymouth, and
RJP Agencies leased 31,000 sq. ft. at North Point in Plymouth.
• In building sales activity, AMB Property Corp. sold a 40,000-sq.-ft., owner-occupied building at 1600 Freeway Boulevard in
Brooklyn Park to Sandvick Hard Materials Minneapolis.
• Major pockets of activity include Brooklyn Park, Brooklyn Center and Rogers. Most users are looking for office warehouse
space with 24-foot clear.
• Rental rates are creeping up-in some cases, about 25 cents per square foot-and concessions are beginning to dwindle.
New construction is impacting existing properties. If properties are truly competitive with new construction, landlords are
bumping up their rates. Net asking rates inched up to $4.55 for warehouse space and $8.26 for office.
• Two major land sales closed in the Northwest. Capstone Realty Inc. acquired approximately 20 acres in Brooklyn Park near
Highway 610 and 93rd Avenue. Capstone likely will develop high-image office warehouse [hat will cater to medical
technology companies.
• The Beard Group ac wired 600 acres in Hassan Townsh' which over time will be annexed into nei hborin Ro ers. The
site is located lout of I-94 and County Road 81. Beard Group's plans for the land call for 400 acres of residential
development and 40 acres of industrial develoomenf and tna ti=~=~~o will be retail. The industrial portion will be ideal for
companies looking to do build-to-suits.
The Outlook
The Northwest could see another 300,000 to 400,000 sq. ft. of absorption by the end of 2006.
Rates will continue to firm up and fewer concessions will be on the table.
Taking advantage of healthy market conditions-particularly in office warehouse space~ne or two developers may still pull the
trigger this year on projects. Maple Tree Business Center, proposed by private investors in the Maple Grove Business Park, may be
the most likely to move forward. The investors are meeting with city officials and hope to be in the ground by fall. Plans call for an
80,000-sq.-ft. office warehouse building that would be 24-foot clear and have the ability to park heavy office (up to SO% to 60%).
Duke Real se ,north of Interstate 94 along the east side of Highway 101, to build a 120-acre
in ustrial ark that could ccommodate u to 1.4 mil' of development. One phase would be a 100,000- to 150,000-
sq: ft. o ice warehouse building with 24-foot clear. Duke probably will need some preleasing to be in the ground this year, as
opposed to Maple Tree, which is more likely to be built on a speculative basis.
First Industrial Realty Trust Inc. has a site in Brooklyn Park, but it will not move forward until it has a tenant. First Realty is
planning a 150,000-sq.-ft. building with 32-foot clear.
The Northwest will continue to see strong activity and investment. Target Corporation, for example, is moving forward on plans for
a $1.75 billion campus expansion and mixed-use development in Brooklyn Park. The company is planning to develop more than
eight million square feet of office space, two million square feet of retail space, and as many as 3,000 housing units and hotels.
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• Construction continues at record-setting pace; absorption remains very strong
• Retailers and developers recycle inner-ring real estate to enter desirable, densely populated markets
• Regional malls redefine, reinvent themselves
The Twin Cities retail market is still going gangbusters with a drop in vacancy to 8.5% (8.8% with sublease spate) from 6.4% six
months ago and more than 3 million square feet of positive absorption in the past 12 months. And it's not about to stop any time
soon. Demand continues to outpace supply, and another 2 million square feet is under construction with much of it pre-leased.
Also, another 3.7 million square feet is planned with start dates set for later in 2006 and 2007.
Community centers, typically anchored by two big-box retailers, are the growth engine; they boasted 655,564 sq. ft. of positive
absorption in the first half of 2006, resulting in more than 1.2 million square feet in the past 12 months. This strong activity helped
further push down their vacancy to 2.8% (3.2% with sublease space), a drop from 3.7% at year end. This may be the lowest-ever
historical vacancy. Seven community centers totaling 1,645,000 sq. ft. are under construction with another 3,187,000 sq. ff.
planned.
Target/Wal-Mart Spur Growth
Target and Wal-Mart continue to fuel retail development as they compete far market share and expand their "super" formatr.
Three superTargetr are planned or underway, and Target also is aggressively pursuing "scrapes" where it razes traditional stores
and builds SuperTargetr. Scrapes occurred in West St. Paul and Roseville and are approved in st. Paul's Midway and in Edina.
Meanwhile, Wal-Mart expanded with stores in West St. Paul, Inver Grove Heightr, Woodbury and St. Anthony and is going "super`
where it has available land, including Vadnais Heightr and Oak Park Heights.
Redevelopment Is Name of Game
As the supply of attractive retail sites continues shrinking in the highly sought-after, inner-ring and core cities, developers and
retailers are being creative in redeveloping and recycling existing spaces. Retailers are buying nontraditional properties-
particularly in the Interstate-494/694 loop-and redeveloping them into retail. Hot spotr include 50th and France and other Edina
neighborhoods, downtown Wayzata and st. Paul's Grand Avenue. Wal-Mart, for example, is looking at redeveloping the former
Best Buy headquarters in Eden Prairie. Target is redeveloping its Midway store and acquired the adjacent Four Pointr Sheraton in
order to build a SuperTarget. Haugland Company is redeveloping the southwest corner of 50th and France into retail and condos,
which included scraping an Arby's. Cypress Equities is demolishing a movie theater in Edina to develop retail and condos.
However, developers will attest that redevelopment often is complex, costly and time-consuming. The price can be double that of
conventional retail sites. Retailers hope that by gaining access in high-density, well-established markets, their strong sales will
support these more expensive redevelopments.
Regional Malls Evolve
Retailing never stops changing, and regional malls never stop evolving in their quest to attract shoppers. While sales remained
strong, the vacancies at Northtown and Brookdale continued to affect the malls and surrounding properties. Both properties are in
the process of repositioning themselves by adding both traditional and nontraditional anchors. Northtown added Burlington Coat
Factory and Steve & Barry's, and Home Depot is underway. Brookdale is planning on redeveloping sections of the property.
Meanwhile, stronger regionals are adding open-air, lifestyle elements to stay fresh. Rosedale's $40 million lifestyle center
component will include an AMC movie theater, Granite City Brewery, Borders Books, and many more. Southdale also may
undertake a lifestyle conversion at some point and also has been in talks with upscale anchors Nordstrom and Neiman Marcus.
Fast-Casual Offers Recipe for success
The "fast-casual" concept~ombining fas[-food's quick service with high-quality, fresh food-continues to be a popular trend.
Examples are Chipotle, Panera Bread, Salsarita's Fresh Cantina, Pei Wei and the new Cosi cafes-a mix between a coffee shop,
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Retail Enjoys Robust Activity, Led by Community Centers
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bistro, sandwich shop and wine bar. These eateries cater to time-crunched consumers wanting mare than typical fast-food. Sit-
down restaurants like Chili's and Applebee's are retooling and adapting to compete by quickening up service, changing menus and
adding curbside delivery.
New Retailers, Restaurants Looking at Metro
National retailers, attracted to the metro's diverse economy, are exploring locations. New players include outdoor gear and apparel
retailer North Face, Cosi, LA Fitness, Boston Pizza, Gimme Sum and Raising Cane Chicken Fingers. The International Council of
Shopping Centers (IC9C) recently ranked the Twin Cities as the second-most promising U.S. market for retail developers,
considering GLA per capita, projected yearly population and income growth.
More Users Buying Land
Traditionally, retail developers take down large tractr of land and do multiple leases with multiple retailers or sell parcels to
retailers. However, general merchandise and home improvement retailers are self-developing land.
Tale of Two Cities
Two metro-area lifestyle centers are open-Shoppes at Arbor Lakes in Maple Grove and Woodbury Lakes in Woodbury. While
Arbor Lakes appears to be thriving, vacancy remains at Woodbury Lakes. One issue may be that the Woodbury trade market is not
as large and does not generate as much daytime traffic as Maple Grove. (Developers Opus and Red Development recently sold
Woodbury Lakes for $99 million to Cornerstone.) Meanwhile, developers continue to look for opportunities to build new lifestyle
renters. One is proposed in st. Louis Park, and there's discussion of one in Chanhassen.
The Outlook
Construction and absorption will continue to be strong with 2 million square feet under construction-much of it pre-leased-and
3.7 million square feet planned. Community centers will continue to fuel the growth. Attracted to the metro's diverse economy,
national retailers and restaurants will continue to explore sites. Retailers will continue to recycle inner-ring sites to gain access to
high-density, sought-after markets. They also will continue to face challenges in redeveloping this real estate. Regional malls will
continue to redefine and reinvent themselves to draw shoppers-whether that means adding lifestyle components or repositioning
themselves by adding nontraditional tenants.
Lifestyle centers will continue to be the sought-after development and investment option as more locations are explored.
Increasing land and construction costs and more stringent city requirementr may stall some future retail development.
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Vacancy Declining
Absorption Dropped off
Rental Rates Flat
Highlights
• Neighborhood centers, which typically are anchored by a grocer or drugstore, experienced a drop in vacancy to 6.5% (7%
including sublease space) from 7.1% six months ago. However, absorption fell to 199,803 sq. ft. from an impressive
633,004 sq. ft. at year end. There are 285 neighborhood centers comprising nearly 18.2 million square feet in the metro.
• Only two neighborhood centers are under construction: United Properties is developing the 75,000-sq.-ft. Victor
Marketplace at County Road 14 and Victor Garden in Hugo, which is anchored by Festival Foods. It will open in third-
quarter 2006. Also, the 61,200-sq.-ft. Wedgewood Village is being built by Capital Growth in Mahtomedi at Wildwood Road
and Century Avenue. Aldi will anchor the center, which is scheduled to open in third-quarter 2006.
• Another SO centers totaling 529,320 sq. ft. are planned with groundbreakings slated for 2006 and 2007.
• "Spotty," however, might best describe neighborhood center development. t' min tou her ~ ~ n d
land is ve ex ensive so develo ers are bein f r k like Hugo, Orono Elk River nd Forest
ke. Also, if a developer does find a site, plans are not necessarily a "slam dunk" with the city. For examp ,Reliance
Development Co. is planning a 72,000-sq.-ft. neighborhood center called Diffley Marketplace at Diffley Road and Lexington
Avenue in Eagan. It will be anchored by a 43,000-sq.-ft. Redermacher's Fresh Market. The Eagan City Council gave final
approval for the 11-acre development. However, because the plan met with resistance from many neighbors, the city
approved it with a condition that prohibits access to the development from a residential street called Daniel Drive. The
county has said it will not approve the plan without this aaess point. Therefore, the council's decision basically ties the
hands of the developer. The project is currently on hold as a result.
• Also impacting neighborhood center development is two of the largest grocery stores changing their paradigms. Roundy's,
which acquired Rainbow Foods several years ago, is still trying to fgure out if it wants to develop new stores in the metro,
and Cub Foods is switching gears from being a tenant to wanting to own its sites. Meanwhile, the grocery market
continues to face stiff competition. For example, Coborn's, previously an out-state grocer, is now right at the door of the
Twin Cities; it already has stores in Clearwater, Sartell and Ramsey. Aldi is rapidly growing and has plans for approximately
30 metro-area stores. Festival Foods is also growing with new stores in Hugo and a redevelopment in Bloomington.
• Wal-Mart and Target's super stores, with full grocers, also are taking a big bite out of traditional grocers' profits. There is
no longer any stigma associated with shopping at discounter Wal-Mart. While grocers can't compete with Wal-Mart on
prices for essentials like diapers, many are working to draw shoppers by adding convenient features like fresh flowers and
beefing up their delis and adding home meal replacement. (Many time-crunched shoppers want freshly prepared take-
home meals that are a step up from traditional fast-food). Some grocers are trying to create a niche by offering shoppers
a nicer environment and adding convenience.
• Some active in-line, small-shop retailers include hair salons like Cost Cutters, SuperCuts and Great Clips, tanning salons,
fast-casual restaurants and banks. Also, Fed Ex/Kinko's is looking for new sites. Others include Winestyles, Mathnasium,
Slim for Life, Moe's, and Genghis Grill. Those looking for locations include Homemade Pizza, Salad Creations, and Gimme
Sum.
• When it comes to a ay~pt~, Bella opened a new location in Blaine and also opened the View Restaurant & Lounge, 2730
W. Lake St., in the Calhoun Beach Club in Minneapolis. Axel's Bonfire is expanding in the metro with more locations,
including its Rudy's Redeye Grill concept. Raising Cain is a new fast-food chicken restaurant looking for sites in addition to
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its first site in Apple Valley. Moe's Southwest Grill is expanding, as is Potbelly Sandwich Works and Pei Wei Asian Diner.
• Also, the new Cosi cafes are hitting [he market. They are a mix between a coffee shop, bistro, sandwich shop and wine
bar. The first locations in the Twin Cities are in downtown Wayzata, Woodbury and downtown Minneapolis. Cosi Inc. is a
franchised, quick-service concept with approximately 96 locations In 20 states so far. In the metro, there are letters of
intent for five more locations, but the franchisee says there could be as many as 40 Cosi cafes in Minnesota.
• Some sit-down restaurantr are retooling and adapting to compete with the quick-serve, fast-casual restaurantr. In that
effort, they are changing their menus to add take-out Items and add curbside delivery. They are speeding up service and
offering less expensive menu items. Examples are TGI Fridays, Chili's and Applebee's.
• With services like Netflix, which allow consumers to order DVDS online, people no longer have to drive to the
neighborhood video store. This change in the video rental business is affecting neighborhood retail centers around the
country. Movie Gallery Inc., owner of the Hollywood Video and Movie Gallery concepts, plans to cut its retail space by 50%
as part of a nationwide downsizing of more than 2,200 locations. Itr stores are typically 7,500 sq. ft. Also, Blockbuster
Inc., which has stores that range from 4,500 to 6,500 sq. ft., plans to close 100 to 150 locations each year across the
wuntry. On the positive side, many video rental stores are in high-traffic locations, and this will open up opportunities for
new co-tenancy.
The Outlook
Neighborhood centers'suctess will continue because their niche is serving time-pressed shoppers searching for convenient
locations and fresh, new service retail conceptr.
Landlords will continue to look to add new versatile conceptr and be creative in new uses.
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Vacancy Dropping
Absorption Hefty
Rental Rates Slight drop
Highlights
• Community centers are still the "big ticket" in 2006. They continued their shining pertormance in the first half of 2006 with
655,564 sq. ft. of positive absorption, resulting in more than 1.2 million square feet of absorption in the past 12 months.
This strong activity helped to further push down the vacancy rate to 2.8% (3.2% with sublease space), a drop from 3.7%
at year end. This may be the lowest historical vacancy ever; it is the lowest in at least the past decade.
• Net rental rates dropped slightly to $17.87 from $18.05.
• With 102 properties totaling nearly 25.5 million square feet, community centers are by far the largest retail product type in
the Twin Cities. They are very desirable for retail tenants, primarily due to the powertul draw of their two or more anchors,
which often include a general merchandiser, grocer, drugstore, electronics store, home improvement store or sporting
goods retailer.
• Demand continues to outpace supply, and construction continues at a vigorous pace. Seven community centers totaling
1,645,000 sq. ft. are under construction; all but one is set to open in 2006. The largest center underway is the 700,000-
sq.-ft. Fountains at Arbor Lakes in Maple Grove, anchored by Lowe's Home Improvement Center, Costco, Marshall's and
Dick's Sporting Goods. Developed by OPUS, it is scheduled to open in fourth-quarter 2006.
• In addition to these centers under construction, the future pipeline is extremely strong. An unprecedented 3,187,000 sq.
ft. is planned with groundbreakings scheduled in 2006 and 2007.
• Anchors Target and Wal-Mart are fueling [his growth, as [hey compete for market share and continue to open new
locations as well as expand existing stores to "super" formatr, which include full grocers. Target remains a powerhouse
anchor as it continues to expand its presence. New SuperTargetr are planned or under construction in Monticello, Maple
Grove and Richfield.
• The retailer also is undertaking a number of "scrapes" where it razes smaller Target stores and builds its larger
SuperTarget format. Scrapes already occurred in West St. Paul, Edina, Fridley and Roseville and stores are open. Target
Corp. just received approval to raze the St. Paul Midway Target and build a SuperTarget, which will be the retailer's first
urban SuperTarget. The 186,000-sq.-ft. store will be developed on the former Four Pointr Sheraton site next door to the
existing Target at University and Hamline avenues. The current store will be demolished and turned into a parking lot
connecting to the proposed central corridor. The SuperTarget should open in 2008. These redevelopmentr are a testament
to Target's very attractive real estate.
• Wal-Mart also is expanding. It has new stores that have opened in the past six months in West St. Paul, Inver Grove
Heights, and Woodbury. The giant retailer also is starting to go "super" where it has available land. Stores in Vadnais
Heightr and Oak Park Heights both will be converted to Wal-Mart Supercenters.
• Both Target and Wal-Mart also continue to look for highly sought-after, inner-ring locations, which typically require
redevelopment. Anything within the I-494/I-694 loop will likely require atear-down. Wal-Mart, for example, is looking at a
proposed redevelopment of the former Best Buy headquarters in Eden Prairie. The building has a prime location in the
city's "Golden Triangle"-a valuable triangle of land between I-494 and Highways 212 and 169.
• Additional community center anchor tenants also are in expansion mode. Lowe's has stores planned or under construction
in Maple Grove, Shakopee, Rogers and Oak Park Heights. Home Depot is expanding with new stores planned in Monticello,
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Maple Grove and Richfield. Costco has a new store going up in Maple Grove and is scouting the east metro. Dick's
Sporting Goads has a new store planned in Maple Grove. In addition, ]C Penney is rumored to be looking at new
community center sites.
• Anew retailer coming into community centers is LA Fitness, which is looking in Eden Prairie, Roseville, Blaine, Woodbury,
Apple Valley, Brooklyn Park, Maple Grove and Minneapolis.
• Active restaurants [hat are in community centers include Granite City Food & Brewery, which has metro locations in Eagan
and Maple Grove and one set to open this summer in St. Louis Park at Highway 100 and Excelsior Boulevard. The
company also has a restaurant in st. Cloud and plans to open a location in Rosedale Mall this fall. Boston Pizza also is
expanding with current locations in Maple Grove and Coon Rapids.
The Outlook
With 1,654,000 sq. ft. of under construction and another 2,737,000 sq. ft. planned later in 2006 and 2007, clearly, community
centers will continue to be the growth engine of the retail market. Demand and activity will continue to be robust particularly in
fast-growing suburban markets.
Redevelopment will continue to play a key role as retailers look for desirable inner-ring locations.
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