©2024 Real Estate Publishing Corporation
April 2024 • VOL. 41 No. 3
Finalists and Winners! Page 38
“It’s been a whirlwind for the last four years”:
Healthcare real estate market in the Twin Cities remains in flux By Dan Rafter, Editor
The exterior of Highland Bridge Medical, a two-story, 60,000-square-foot multi-tenant medical office building, in Saint Paul, Minnesota. (Photo courtesy of Ryan)
T
he last four years? They’ve been challenging ones for healthcare providers and the brokers and developers working in the healthcare real estate sector. First there was COVID, which, as it did with all industries, injected chaos into the delivery of healthcare services. Since then, medical providers have faced nursing and doctor shortages, declining reim-
bursements and higher costs both for building new facilities and delivering care. The higher interest rates that came in late 2022? Those didn’t help, either. Still, despite these challenges, the healthcare real estate sector in the Twin Cities market remains a busy one, with tenants still actively looking for space and investors once again considering sinking their dollars into healthcare facilities.
Ann Duginske Cibulka, vice president of real estate development for healthcare at Minneapolis-based Ryan Companies, said that demand for healthcare space remains strong throughout the Twin Cities market. Much of this demand stems from the ways in which patients receive medical care today. Instead of traveling to a central hospital, more patients are seeking care, even for more intensive procedures, Healthcare to page 22
Twin Cities’ industrial sector settling into a new normal By Dan Rafter, Editor
I
ndustrial development, sales activity and leasing all dipped during the first quarter of 2024 across the country. And in the Minneapolis-St. Paul market? CRE professionals working this sector saw the same thing: Demand for industrial space has finally cooled. That doesn’t mean that the industrial market is struggling in the Twin Cities. It just means that it has returned to a more normalized state. The activity lev-
els that this sector saw in 2020 and 2021 were not sustainable or normal. Part of this is connected to the higher interest rates that have hit the commercial real estate market since 2022. These rates make it more expensive for investors to borrow the money they need to acquire all commercial assets, including industrial real estate. And while the Federal Reserve Board has indicated that it will no longer increase its benchmark interest
rate, it hasn’t slashed this rate, either. And that has kept other interest rates higher, too. What does that mean for the industrial sector in the Twin Cities today? Joseph Mahoney, senior director with Opus Development Company, said that there is still demand from both investors and tenants for industrial space here. That demand, though, has cooled to pre-2020 levels. Industrial to page 28