©2024 Real Estate Publishing Corporation
December 2024 • VOL. 41 No. 7
Office conversions, high interest rates, soaring construction costs and sluggish sales and development activity: A look back at a challenging 2024 commercial real estate market By Dan Rafter, Editor
F
Noble Apartments in Bloomington, Minnesota, developed, built and managed by Enclave. (Photo courtesy of Enclave.)
ew would argue that 2024 wasn’t a challenging year for commercial real estate throughout the markets of Minnesota. Developers, brokers, builders and lenders faced the challenges of high interest rates, even higher construction costs and a shortage of labor. Investment sales slowed and new development activity clogged. So, yes, 2024 was not a particularly enjoyable year for most CRE professionals. The good news? The coming year looks to be a stronger one for commercial real estate sales, development and leases. Credit much of the optimism to the
Federal Reserve Board finally lowering its benchmark interest rate in late 2024. The hope is that this move will cause interest rates to continue to fall in 2025, something that could spur more sales and development activity in the coming year. As this is our last issue of the year, Minnesota Real Estate Journal is looking back at some of the bigger stories we covered in 2024. Here’s a look back at the challenges – and victories – that Minnesota-based commercial real estate professionals experienced in 2024.
The winning office formula In our first issue of the year, we spoke with Andrew Webb, managing principal of Redline Property Partners, an investment, management and development firm with offices in Minneapolis and Charlotte, North Carolina, about what it takes to fill office space today. Webb’s take? It’s about the draw of urbanized suburbia, the right location and the right amenities. Simply put, the right office space in the right location will continue to attract tenants, Webb said. Office to page 22
Selling Farmington to developers, businesses? It’s all about promoting the people, spaces and spirit of this Minneapolis suburb By Dan Rafter, Editor
D
eanna Kuennen faced a challenge when she became community and economic development director for the city of Farmington, Minnesota, two years ago: She needed to sell Farmington to developers and new businesses. And to do this, she
needed to define what Farmington was and what set it apart. The problem? No one could provide an answer. So Kuennen talked to residents, government officials and business owners until she found it, that one
thing that set Farmington apart from its neighboring communities. “This community is filled with businesses and people who won’t let other businesses and people fail,” Farmington to page 26