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Twin cities commercial real estate market remains hot

Commercial real estate market in the Twin Cities in 2015 has been very strong for the first half of the year and is expected to remain strong throughout the remainder of the year. The strength of the overall market, including multi-tenant commercial, office, medical industrial and even retail, suggest the doldrums of the real estate crisis are finally past.

Perhaps the most impressive statistic is the fact that in spite of 1.75 million square feet of multi-tenant projects becoming available during the first half of 2015, the vacancy rate only increased 0.6 percent. The absorption rate for all of this new square footage has been keeping pace with new construction and the article notes more real estate was absorbed in the first six months of the year than in all of 2014.

The hottest market of all has been multi-family residential. With 5,000 units being made available during 2014, the vacancy rate remains very low, and by the end of July 2015, stood at 2.7 percent. The rate has been below 3 percent for the last four years.

Much of this growth has been driven by development within the urban core of Minneapolis and St. Paul, with buyers looking for walkable neighborhoods that minimize the need for cars.

Despite the hot market, you want to obtain knowledgeable legal advice and perform all necessary due diligence before you begin your next development transaction. You want all of your deals, no matter the market, to be good deals. In addition to reviewing the property, your attorneys can help with financing and any regulatory compliance.

For developers, hot markets always carry a double-edged risk, as you could wind up with too much exposure, should the market cool, but at the same time, you don't want to lose deals by being too cautious.

Source: rejournals.com, "Cushman & Wakefield|NorthMarq: Commercial real estate market sizzling in the Twin Cities," Dan Rafter, August 26, 2015

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