Big announcement this week from the Feds! And consumers and investors welcome the relief. Being the first interest rate cut in four years, we could see more deals and more movement. Overall, the Twin Cities economy has remained healthy with continued low unemployment and job growth.
The data for the US economy puts us ahead of any other country after we all faced the effects of a global pandemic. Because of our cooling inflation (we’re currently very close to pre-pandemic numbers), a strong labor market, and continued economic growth, we had the best recovery in the world. Plus the Dow hit another record high this week. Both help grow investor confidence in making deals, and there are great deals to be had! Here’s what I see on the ground:
1. Banks are still shying away from office deals and require more money down to make them happen. Office space demands continue to weaken as vacancy rates increase. We see smaller spaces (under 5,000 SF) as the exception. Recently, we’ve leased several, especially those with their own entrance or in smaller office centers. We’ve got a beautifully finished 2,000+ SF space in Vadnais Heights with its own entrance, restroom, kitchen, parking, and more.
2. We’ve completed several deals for larger flex and office spaces through government contracts. State and Federal agencies tend to rent a lot of square footage and stick around. I discussed the pros and what to know before leasing to the government in earlier blogs. Government contracts continue to pay off for us with 10,000+ SF industrial/flex and 6,000 SF office deals recently finalized.
3. Retail and general commercial spaces are doing pretty well and excellent small business opportunities are definitely out there. For example, we have new construction square footage on Hwy 55 frontage available in Medina, a fast growing community with median homes valued at over $800,000. A fantastic opportunity for the right business, the space is anchored by a very high-end dental spa, a new concept merging dental care with a relaxing spa setting. Heading north, we have another excellent opportunity with a general commercial 6,500 SF space located in the hub of Coon Rapids retail center. Let us know if you know anyone looking for these types of spaces.
4. Industrial is still solid and strong. We’ve been buying, leasing, and selling properties. In fact, we have a fantastic property coming up for lease in Plymouth, just off Highway 55. With 40,000 SF and fantastic outdoor storage, this deal won’t be around for long. Reach out if you’re interested.
5. Metro industrial continues to be hard to find, but we’ve got answers. The I-94 corridor has proven to be a convenient spot for those businesses being pushed out of the metro due to high cost and low availability. We have several available listings in the St. Cloud/St. Joe/Waite Park area. From large truck/equipment outdoor storage lots to flexible warehouse, storage, manufacturing, and distribution spaces, we can help. Learn how to choose the right warehouse space here.
Conclusion
It’s difficult to predict the future of commercial real estate with certainty. My recommendation is to stay informed and be adaptable. The future of office, retail, general commercial, and industrial are shaped by evolving factors –– some we can control, some we can’t. But whether through the private sector or government, deals are out there. Reach out to CEG if you are looking to add commercial real estate to your investment portfolio or need a business space.
Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.