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EDEN PRAIRIE, MN—The retailer Best Buy has released a study it commissioned to support its development of a new corporate campus in the Twin Cities suburb of Richfield. According to the study, the new corporate campus will generate $14 million in spending annually to the economy of the Richfield.

Best Buy announced plans earlier this year to become the latest large Twin Cities corporation to build its own corporate campus. The consumer-electronics retailer plans to leave its current headquarters complex here and will spend $150 million to build 1.5 million sf of office space on the redevelopment site in Richfield at I-494 between I-35W and Penn Avenue. Construction is slated to begin in the spring of 2001, and the new corporate headquarters will be complete by summer of 2002.

But the proposed project, which requires assistance from the city of Richfield to relocate several businesses and dozens of homes, has drawn opposition from some neighborhood businesses and residents. Partly in response, the company hired Anton, Lubov & Associates of Minneapolis to study the economic impact of the campus. According to the study, the campus will generate about $7.3 million in property taxes beginning in 2003. Some of that money will go to build a new bridge over Penn Avenue, while some of it will go to fund new housing construction and remodeling programs.

The study also notes that when Best Buy relocates, there will be 5,500 more employees in the city, a 35% increase. Moreover, the $150-million development will generated $187 million in economic activity, creating 3,800 full-time construction jobs during the building phases.Public-Private Partnership Formed to Boost Burnsville DevelopmentSeventeen real estate firms band together in an alliance to fill local buildings.Jim McCartney BURNSVILLE, MN—As part of an effort to expand and market development opportunities in the Twin Cities suburb of Burnsville, the city and its chamber of commerce recently formed an alliance with a group of some 17 local commercial real estate firms. “Everyone benefits from boosting occupancy in existing buildings, putting commercial property to better uses and encouraging new development,” says Gary Lally, senior vice president of Hoyt Properties, one of the partners. The alliance, which has a three-year plan of promotional activities and an annual budget of $50,000, is called the Burnsville Commercial Real Estate Council.University of St. Thomas Buys BuildingNew asset may be renovated or torn down o make way for new law buildings.By Jim McCartneyMINNEAPOLIS—As part of its effort to expand its Downtown Minneapolis campus, the St. Paul-based University of St. Thomas recently bought the MacPhail Center for the Arts building at 1128 Lasalle Ave. St. Thomas runs a Graduate School of Business on its campus a block north of MacPhail at 1000 LaSalle Ave. and plans to build a new law school near the site.

School officials have yet to be determine whether the MacPhail building would be incorporated into the law school or torn down. The terms of the sale will allow MacPhail to operate in the building until 2004, although it plans to relocate in the downtown Minneapolis area before that deadline.Gander Mountain Hires SPS for B2BConsultant will provide Web-based exchange services for Minneapolis retailer.By Jim McCartneyMINNEAPOLIS—Gander Mountain, a Minneapolis-based outdoor sporting goods retailer, has hired St. Paul-based SPS Commerce to provide Web-based business-to-business exchange services. The new service will create an automated supply chain for the retailer as well as more efficient and cost-effective exchanges, according to Grander Mountain officials.

Gander Mountain, with 39 stores in Minnesota, Wisconsin, Michigan, Indiana, Ohio and Pennsylvania, specializes in hunting, fishing, and family camping gear, as well as outdoor apparel. SPS Commerce specializes in providing retail and manufacturing business-to-business exchanges, counting Sears, Kmart, Cisco and Walgreen’s as clients.Duke-Weeks Enters Duluth With Build-to-SuitBy Jim McCartneyREIT will develop a 153,400-sf office for United Health Group. DULUTH, MN—Duke-Weeks Realty Corp. is building a 153,400-sf build-to-suit office building for United Health Group in Duluth, about 150 miles north of the Minneapolis-St. Paul area. The two-story facility, which will house more than 400 new employees over the next few years, will be at the intersection of Ricelake and Arrowhead roads, two miles northeast of Downtown Duluth. The project will include up to a $2.5 million tax-increment financing to pay for utilities related to the project.

In the Twin Cities area, Indianapolis-based Duke-Weeks owns, manages or has under development more than 8.4 million sf of office and industrial properties. Duke-Weeks’ office development for United Health Group will represent its first construction and lease activity in the Duluth area. The project is expected to be ready by March 2001.E&V Named for Glenwood Hospital ProjectBy Jim McCartneyFirm will CM on 10,000-sf patient wing addition.GLE NWOOD, MN—Glacial Ridge Hospital chose E&V Consultants and Construction Managers to be the construction manager on a $6.2 million building in Glenwood, MN. The project consists of a 10,000-sf patient wing addition, a 14,000-sf clinic addition and 13,500-sf of renovations, including lab, radiology and administration. Project completion will be in fall 2001.Office Vacancies Edge Up in Twin CitiesQ2 vacancies crept up to 8.9%, despite robust absorption.By Jim McCartneyDespite a strong leasing market in which the Twin Cities office market absorbed 2.5 million sf of space in the last year, vacancy rates in the area were up to 8.9% from 8.3% in the market, according to a second quarter market survey from Colliers Towle Real Estate.

The upward movement is largely because of the 2.9 million sf added to multi-tenant market through new construction, redevelopment and retail-to-office conversions, according to the report. Subtracted from the office market, which totals 59.5 million sf, are four buildings converted to single-tenant use and one building reclassified as industrial space.The expansion breaks down this way: two million sf in 12 new office projects; 325,000 sf in renovated buildings; three former single-user buildings totaling 488,000 sf converted to multi-tenant buildings; and 190,000 sf of retail space converted to office use. Pent up demand and surprisingly strong technology-based growth in the Downtown Minneapolis office market account for much of the absorption, as more than 1.2 million sf was filled in that market.

Internet-based companies are active in the Minneapolis CBD warehouse district, where many of the older buildings are being renovated to suit their non-traditional requirements and where small firms find the old brick walls, high ceilings and exposed beams they fancy. One of the biggest leases was Retek, a Minneapolis-based software firm, which will anchor the 450,000-sf building Minneapolis-based Ryan Cos. is building on Nicollet Mall.

“Many would agree that this trend could end up to be a fad if the recent tumble of Nasdaq firms curtails future IPO deals for tech-related companies,” says Barbara Byrne, the economist at Colliers ABR in New York City. “However, the technological revolution still has room to grow, given the market potential for information technology abroad.”

Downtown Minneapolis saw most of the new construction, as 1.4 million sf was added in new space. So far, however, the CBD still has the lowest vacancy rate in the Twin Cities area at 6.3%.Minnesota Life Seeks TenantsPreparing for a big move, the owner/occupant hopes to fill its current space with outside tenants.Jim McCartneyST. PAUL, MN—In an attempt to fill more than 200,000 sf of vacant space that will pop up when its new office building in Downtown St. Paul is ready in mid-October, Minnesota Life said it would agree to lease space in its current headquarters building across the street. In its search for tenants, Minnesota Life will agree to lease space not just in its new 635,000-sf 401 Robert building, but also at its 375,000-sf headquarters building at 400 Robert. It will even consider offering space at its 132,000-sf Lafayette Center building in Lowertown.

“We don’t consider our campus a monolithic entity,” Minnesota Life spokeswomen Maggie Jensen told GloteSt.com. Given its growth pattern, Minnesota Life eventually plans to occupy all the space in the 400 and 401 buildings. Until it is big enough to occupy the buildings, plans were to lease the extra space in its new building to outside tenants and hired Welsh Cos. as its leasing agent. If a prospective tenant is interested in space at the 400 building (now filled with Minnesota Life employees), which is less expensive than the new 401 building, Minnesota Life would likely try to accommodate them, Jensen says. Likewise, if a prospect were interested in its Lafayette Center, the company would consider a deal. But Jensen adds that the leasing strategy currently is focused on the 401 and 400 buildings, which need to fill from 200,000 sf to 250,000 sf.

Minnesota Life plans to open its new 401 Robert building on Oct. 18 to coincide with the debut of the new skyway connection to the building; originally, it planned to delay moving into the building until January 2001. That means the retail shops on the bottom floors and the underground parking ramp have to be ready to go then, too.Ryan Cos. Buys and ExpandsDistribution Center in IllinoisA 190,000-sf addition will be ready by early 2001, say Ryan officials.Jim McCartneyMINNEAPOLIS—Ryan Cos. US has bought a 250,000-sf distribution center in Carol Stream, IL. Minneapolis-based Ryan plans to expand it by 190,000 sf. to improve its functionality and accommodate the growth of the office and industrial building’s primary tenant, Saturn Freight Systems Distribution.

Given its location on a former contaminated site, Ryan officials said the distribution center project poses a number of challenges, especially since the improvements need to be made while the tenant stays in the facility. Ryan expects the construction to be completed in February. The building was bought with assistance from Insignia/ESG.

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