5.0. EDSR 10-11-2004 ITEM # 5.
‘'LLi*/
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority
FROM: Heidi Steinmetz, Assistant Director of Economic Development 14$
DATE: October I I, 2004
SUBJECT: Strategic Industrial Marketing Activities Report
Attachments
• "Red Tape Thicker in Some Cities Than in Others,"Minneapolis Star Tribune,
September 14, 2004
• Industrial Real Estate &Logistics Conference Flyer
• Ad featuring Display Solutions, The Business Journal, September 24, 2004
• • Direct Mail Piece
• Proclamation Memo dated October 4, 2004
I. Product Offering Strategy
Industrial Land Issue
The landowners of Elk River Business Park and Elk Path Business Center have indicated
interest in participating in a master development agreement with the EDA for the
development of their industrial/business park property. Staff is awaiting a response from
the landowners regarding the revised Contract for Initial Sale and Development.
I I. Competitive Strategy
The attached article summarizes the results of a development study recently completed by
the MN chapter of the National Association of Industrial and Office Properties (NAIOP).
The study includes 78 Twin Cities communities including Elk River. The recently released
results indicate the variations in processing times and fees. The study was based on a 50,000
SF office/warehouse building on 4.1 acres of land that would need to be rezoned from
residential purposes to commercial. Staff is preparing a side-by-side comparison of Elk
River with its key competitor communities. The summary report will be provided at the
November EDA meeting.
Ill. Key Account/Lead Generation Strategy
Department of Employment and Economic Development (DEED) Annual Conference
• Staff attended DEED's Minnesota Development Conference in Minneapolis on October
Strategic Industrial Marketing Activities Report
October 11,2004
Page 2 of 2
6-7. The conference provided staff with educational opportunities in addition to networking
• opportunities with key accounts.
Minnesota Real Estate Journal (MREJ) Conference
Staff will attend MREJ's Industrial Real Estate and Logistics Conference in Golden Valley
on November 3rd. See the attached flyer and let staff know if you would like to attend.
I V. Promotions & Advertising Strategy
New Ad Featuring Display Solutions
The attached ad featuring Display Solutions appeared the September 24th issue of The Business
Journal. The ad photo was also used in the direct mail piece described below.
V. Public Relations Strategy
Direct Mail Piece
The attached direct mail piece was distributed in early October to a targeted list of
manufacturers located within the tri-county area. The purpose is to promote the Micro
Loan Program and the Technical Assistance Program. In addition, the home page and
financing pages of the Economic Development Web Page have been updated to coordinate
with the direct mail effort.
VI. Strategic Partnership Strategy
Downtown Revitalization Project
Upon the adoption of a Tax Increment Financing Plan,it is anticipated that the City will
• consider a final Development Agreement with MetroPlains in November or December.
Sherburne County Strategic Planning
Staff has been participating in Sherburne County Economic Development Alliance's
(SCEDA) recent strategic planning efforts. Staff met with SCEDA's consultant Janna King
in late September to provide one-on-one input and will be participating in a 3-hour strategic
planning session in late October.
VII. Business Retention Strategy
Minnesota Manufacturing and Technology Week, October 18-22, 2004
The attached proclamation memo includes your invite for Elk River's recognition event of
Minnesota Manufacturing and Technology Week. The event is scheduled for Tuesday,
October 19th from 10:00am to 1:15pm. City Council and EDA members are strongly
encouraged to attend this event recognizing our local manufacturers. The memo also
highlights other Manufacturing Week promotional activities.
Business Retention and Expansion Visits
Staff will contact EDA commissioners individually to schedule future BRE visits.
•
ket closed that it expects lower third-quarter profits
because of rising raw materials costs. Page D2
Tuesday, September 14, 2004 • Section
Ales Red tape ' ,
-22 000 thicker
ceiling now are priced in some ,
petitive market,"said
i Theisen, presidento
outhern Twin Cities : cities than
,
on of Realtors."Prop
ed homes bring mul-
ss;overpriced homes i
ig no activity."
n others i _ , -
iarket has a 4'/z;month
(homes for sale;afive- * Tuesday,September 14. 2004
iupply is considered Study lists time
1 between buyers and SURVEY from DI.
needed to get
continues oa,°4' local approval Minneapolis projects take
listings an
up more than
360 days, St. Paul, about 390
By Terry Fiedler
Star Tribune StaffWriter
Minneapolis projects take up administrator—Oakdale came
A soon-to-be released devel- to 360 days while St.Paul proj- in at 300 days,at the lower end
oprnent study that includes 78 ects take up to 390. But many of the process scale—said that
Twin Cities communities shows communities took less time. while the data might be useful,
some substantial variations in i Prior Lake's hypothetical pro- what they don't measure is that
the time it takes for a typical cess took 240 days. different cities have very differ-
project to navigate local gov- Many exurban communities ent priorities and different ways
o ernment processes. required more time because of pursuing them that might be
The state chapter of the Na- small staffs are grappling with totally appropriate.
tional Association of Industrial suddenly burgeoning growth. Maas said that reported fees
and Office Properties (NAIOP)r
, Hassan Township in Hennepin were in a fairly narrow band.
called the study the most corn ! County required 450 days, in In Oakdale rezoning, plat
prehensive look at processing j addition to a 45-day pre-appli- reviews and other reviews and
1T-- .7!
r _7time and fees that's ever been cation review building permits could be ac-
'2„'I=''':'':,::''---:f§-1,.4i'i'..,r,f.eg,--fi.,i4!4.1-r �r ^ _ done in a metropolitan market. Time is money in develop quired for the hypothetical
NAIOP targeted 100 key ment,”said Tom Musil,director building for about$20,000.The
Twin Cities area communities of the real estate department at same was true in Albertville,
for participation in the survey, j the University of St.Thomas. Bloomington and Minneapolis.
which asks city officials to esti-
' At the same time,he added,
le r mate processing times and fees "Developers have a partner and Terry Fiedler is at
3 for a 50,000-square-foot office- I that partner is government." tledler@startribune.com.
.',r' warehouse building on 4.1 acres CraigWaldron,Oakdale's city
§ of land that would need to be re-
Ur , ' zoned from residential nun,oses
, x, to commercial.
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The Minnesota Real Estate Journal will host an Industrial Real Estate and logistics Conference on November 3rd,
2004 from 8 am to noon. This conference offers an invaluable learning experience for industrial users and service
providers that are expanding or moving, It will cover,the search for industrial space, planning a move, logistic and
transportation issues concerning their business. The information will also be an excellent venue for real estate profession-
als and associated service firms to hear the latest in development, investment and trends in the industrial market place.
h `` Ihocleatend. Industrial Users, Investors,Owners,
leas,Br° �s,Architects, Economic Developers and Third
Pam Logi Prfonals will attend this exciting event.
minute pdneldiscalss ons'regr r+ it g the following topics: (subjects may change)
1. What is the Outlook may hold for •the industrial real estate sector for 2005.
2. Brownfield's RedevelopmentActivity.
3. Logistics and Transportation issues.
4. Planning for a Move. .
, Direct and Indirect investn nts in dustri. .Properties and Industrial REIT's Outlook.
6. On the Fringe-Job Zones csi Cather Tax fat `naives.
F1 ST
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To Register
£'f:' ciII 952-885-0815ext. 14
REALESTATEa O A orlog cin tea: ww .r+e c urnals.ccrm
• 6 •
twincities.biziournais.com THE BUSINESS JOURNAL Commercial Real Estate&Leasing Guide September 24,2004 9
Greenberg:One thing that's important to , THE ROUNDTABLE PARTICIPANTS
stress is that technology is great,but it will ''
not replace human contact. If too much Lisa Dongoske, vice president&port- COLOSSAL BAN K
reliance is placed on it by a property manag , 1; ,�� <, folio manager, United Properties SMALL BUSINESS
er,you're going to lose a critical component Chuck Greenberg,general manager, LOAN APPLICATION
that ties the tenant to your property, that Colonnade Properties
being the personal relationship between the ,, 4E' Steve Herron, senior vice president,
tenant and the property manager. �a Zeller Realty Corp.
'?,.:421,.'51,04„,.
n _ Michael Stephens, regional manager, 4
The Business Journal: Before changes ` ' . First Industrial Realty Trust Inc. 51,04
®�
the state enacted in 2001,Minnesota's com- "rF -. o0 16
mercial property owners faced some of the x , 2
611111.
highest tax rates in the nation.I understand I don't know if someone doesn't like you, 1
you're concerned those changes could be :i s ''/ that they'll say that in a survey. But with 5 D
rolled back. Why is this important to you, HVAC,it's often a limitation of system.If a L.
and what do you think will happen? Let's system can't cool on certain days, it can't 0 V
start with you,Steve,since you're president ' cool. That's the No. 1 tenant complaint in
of the local chapter of the Building Owners i our industry.
and Managers Association(BOMA). rDongoske:Especially in our climate. 4A14 ®•
Herron: In the late 1990s, BOMA put ,:''''',.,11.,P ` t Herron: That's right. Our climate has 3 :e..) —� \6
together a comparative tax study that coin- ' ,:3_ such extremes,and you can't design a build- / ®�
pared us to other communities.We were off ing that can handle all of them.A building 0
the charts,significantly higher than compa- ,i41 ., , {`' will operate well up to about 95 degrees.And op 2
4� � o
rable markets. What it said to businesses it will do OK down to 0 or 10 below It is dif- 1 \ 5
considering moving here is we really don't ficult to do at 30 below O®
want your business.BOMA has really made GLENN HALVORSON THE BUSINESS JOURNAL Greenberg: And in the spring and fall, o •
it an issue to advocate against these high ABOVE: Chuck Greenberg you've got one day when it's 30 and one
taxes.We were able to get to a tax rate corn- where it's 70.
pression that puts us in the top 15 in the The Business Journal:A disadvantage of Stephens: It's not a gripe,but one thing
country,down from the top five.That's more this discussion is you're speaking from the I've heard from tenants is they want to be /� j
realistic,because we're probably one of the same perspective.Wear the tenant's hat for a treated like you want to be treated. If they DANCE A F T E 1 t
15 largest communities in the nation. Our moment. What are some of the gripes they call for something,call them back in a rea-
priority is to make sure the gains we've made express?What could you be doing better? sonable amount of time.If they ask you to OU T
are kept. Herron: Our industry relies heavily on fix their HVAC, do it right the first time.
Greenberg: Unfortunately, I think these tenant surveys. We get many of the same Treat them fairly. T H LOAN
V•
reforms are destined to be rolled back. The comments:"HVAC(heating,ventilation,air -
need for money is out there,and unfortunate- conditioning)is terrible.""Cleaning is OK." Neil Orman is based in Minneapolis.
ly, there's not much desire to cut spending.
- , � r 11 � 1 As a small business owner
That means they're going to have to look fore t ' z :._,,„11,,,,,,,, t., ,,,1
gym,.;,
s T r t have to be quick on
more sources of revenue.Unfortunately,corn- ,� .� Y , � youq
mercialrealestate—with our collective,very >` ' .' your feet. But you shouldn't
high property values — is an easy pool ofsioll,
fi.i.,,,,
f t
money. There isn't a big enough concentra-
tiontii' rhave t0 be tO get a loan:`Our
of members or votes in any one district �r If` a�"" g bankers are decision makers
to make a difference. ' :111,:.
^1, _ 1
. a youthrough
And eventually there will be a revolt from Who will lead
people who do vote,as opposed to buildings - the process, and get back
who don't. Even if BOMA, the National t' s> #yr- to you on your loan request
Association of Industrial & Office
`�t►" ' ,� fast.We'll be there everystep
Properties, and all the other organizations ,, t+r ,,
were able to mobilize their people, it's not i, , of the way with advice and
going to make a difference. ;lie:- „,,Dongoske: I disagree with Chuck. Trade ry n ,m ► financial support to help
organizations can actively motivate people. -„ r , your business thrive It's not
We need to get people to understand this 1+�i t ^”
f the way most banks operate
issue better, and focus instead on how the i .4 4.110,�, sd
state is spending our money.For example,the ONE LEADING EDGE LOCATION
But it's how we've helped
services that rural northern Minnesota com-
munities get,compared to urban communi- "Extremely helpful,extremely efficient."That's how Bob Michalek of Display Solutions
ties, is way off the charts. They have snow describes the Elk River Economic Development Department.When Bob and his partners,Tom than 85 years,
plows going through when there's no snowBuchta and Jim Studee,launched their firm,the city provided everything from advice on
on the ground. That's how wild and weird potential business locations to help in securing a$50,000 Micro Loan.
state spending is.We need to educate people "It was important to us."The low-interest loan helps Display Solutions to minimize
on that,before we allow these tax reforms to overhead.As Bob notes,"A start-up business can use all the help it can get."
go out the window. It's fairer the way it is
now It's going to be a battle and it's going to For site and financing opportunities,please call (763) 635-1040,or visit u,s on the
happen this year,because the representatives Web at www ci.elk-river.mn.us and click on"Grow Your Business."
turn over in the next election.
Greenberg: I agree with Lisa that the WESTERN BANK``-
biggest problem is that money isn't being crry or
spent correctly.But I think their solution will Elk ......._ We're banking on people.
be to take money from buildings that can't River wrww.western-bank.com
vote back against them. The Light Industrial Hub of the Northwest Metro
• 111
0
10 September 24,2004 THE BUSINESS JOURNAL Commercial Real Estate &Leasing Guide twincities.bizjournals.com
roundtable: the state of the Twin Cities office market
sor this
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f � ;k Ft„ A „ }, } , , , , FAR LEFT: Dennis Doyle LEFT:James Freytag
r„:,,,/,,,x<,� t r TY ABOVE: Kent Warden
a, d :, F {.0''' t r rah %. c f c f
t�' r r ;'`tar ♦r Y +` ^{ {owb '`'yYey1:#-`r
x +3 p y gip, r t overbuilt office supply.We were starting to build buildings
? ` t , a.f r, ' ,rc r r 3% again in five or six years. I think that generally, optimism
= z '' • \;:::::,,--5,;':'fii,,,,,,, about the ability of this market to rebound is probably not
. h w ,. 7.''',. overdone.
How soon will the office ?
The Business Journal:What is the effect of outsourcing
b Y” x Fa
„N + a Warden: I'm not talking to anybody that sees that as a
bb x °x '' " � Y� space ge filled? huge problem. At our ROMA International Conference at
a t' A is Y x 71f.
{t M1 T'n.
n= x:„ -,.:74:::: the end of June in Toronto,our national chairmanincluded
` -='..:•'Z-'7'.4:', "•:5';`,,,...--'..:k" f3Sarah Sttumon Dale I Contributii writer some numbersthatIthou ht wereinterestin in his State of
z'$f,*'z d'ems" ' ,�+,d '=,
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t y r.eta, i''t1;Y} h g g
< >' ; _ �' k Mt the Industry address.The worst case scenario that they've
been able to pull out is that we might lose up to 3.3 million
xperts agree it is a matter of when,not if,the office strong dynamo is Target Corp.Even though they built 2 mil jobs over the next 15 years.That is a lot of jobs,and if you
47,,.. -space in the Twin Cities will be absorbed.But the lion s uare feet of their own cor orate headquarters space, equate it to square footage ou are robabl approaching
the
Y q p q p q q gY p Y
warn,the when could take time. they have really already filled that up and are out in the com magnitude of 500 million square feet,which is significant.
James Freytag,vice president for office properties for CB petitive market now But if you look at in context,that is only 2.5 percent of total
Richard Ellis estimates current vacancies may not be Freytag: Currently, the Class A tenants seem to be the U.S. employment.To balance that,you also need to look at
absorbed until 2009.But Kent Warden,executive director of ones growing—at least out in the suburbs.Then you have the benefits.If in fact our domestic companies can be more
the Greater Minneapolis Building Owners and Managers the financial services.They are growing. profitable because of outsourcing certain of their functions
Association,says he is optimistic it may be sooner,pointing but maintaining their core business here, they may grow
to history.In the 1990 downturn,experts predicted it would The Business Journal:Is the second half of 2004 going to and be profitable and create jobs in other ways.
take 16 years to fill up overbuilt office space here.But new be enough to take up the space?If not,by when? Doyle: If you are a regional or national manufacturing
offices were starting to be built within five or six years. Freytag:Oh heavens,no.You need to have a quite signif company, you are looking into whether you will produce
"It really does depend upon the economy and how many
'cant increase in the current job levels.For example,in the your product in China or offshore in some area. With that
jobs are created,"said Dennis Doyle,CEO of Welsh Cos. metro area,we need to create 42,000 jobs in the service sec said,they still continue to do their marketing,their distri
Doyle,Freytag and Warden discussed with The Business for—the occupiers of space—to get the vacancy rate from bution,their retailing all out of the United States.It is real
Journal the issue of absorption, a comparative measure its current level to get to 7 percent. ly just a different paradigm.
over time of the relative change in available office space. Doyle:But the problem is there are two different job num
bars.There are the job numbers that include the Fortune 500 The Business Journal:When will speculative office con
The Business Journal:Who is going to fill it up? and there are the job numbers that include all of the small struction realistically return?
Doyle:I think it will be small businesses that are growing, business.Our jobs from Fortune 500s are very small. Freytag:It will return when the gross rental rate gets to
who have been started in Minnesota and will continue to Freytag:Depending upon what the employment growth about $28 per square foot. That is when it returns. Like
grow here.Those 5,000 to 20,000 square foot businesses that rate is or what approximate square footage you use,it is like- before,you had the prognostications that it is going to be 16
turn into the 50,000 to 100,000 square feet five,six years later. ly in 2009 to get back to a 10 percent vacancy. years.It might not be that far away.That class A market—
Warden: I would say downtown, the fmancial services Warden: I think the last really deep down cycle we had and those are generally the buildings that get built in a new
sector. Long term, I think some of them are going to be was back in the early 1990s.At that time,I think some of the cycle—that is really healthy.Take 494.In a Class A setting,
digesting some built-in vacancy. I think the other really experts were saying we could have as much as a 16-year the vacancy rate is about 8 percent.Compared to the overall