2006 Corporate Sponsors

American Engineering Testing, Inc. The Avalon Group Barna, Guzy & Steffen, Ltd. news Bremer Bank, N.A. CB Richard Ellis Volume 20, Number 1 January 2006 CSM Corporation Cambridge Commercial Realty Colliers Feature The Collyard Group, L.L.C. What Every Real Estate Professional Should Dalbec Roofing Know About New Market Tax Credits Fantastic Sams General Growth Properties, Inc. by Tony Pasko, Bremer Bank, N.A. Great Clips, Inc. hat if you could borrow 100% of the New Market Tax Credits (NMTC) came into Griffin Companies cost of developing or substantially being in December of 2000 as part of the renovating your new shopping Community Renewal Tax Relief Act of 2000. H.J. Development, Inc. W center project, only pay debt service on 70% These tax credits are intended to stimulate J.E. Dunn – North Central and have the government pay a return on the investment in “low income communities” as Jones Lang LaSalle remaining 30%? While it may take some time defined by census data. While NMTC’s are and effort, New Market Tax Credits can help directed at businesses, many commercial KKE Architects, Inc. you do just that. Landform Tax Credits continued on page 2 Larkin Hoffman Daly & Lindgren Ltd. M & I Bank Madison Marquette Snapshot Messerli & Kramer, P.A. Shops at Plymouth Creek – Lot 5 Midwest Maintenance & Mechanical, Inc. Location: Southwest Corner of Project Morcon Construction Entrance at Hwy 55 and Vicksburg, Plymouth Northstar Partners/Cushman & Wakefield Month/Year to Open: Under Construction. Oppidan, Inc. Anticipated Tenant Delivery: April ‘06 Opus Northwest LLC Lot 5 Ownership: Plymouth Creek PCL Construction Ventures, LLC Park Midwest Commercial Real Estate Underlying Owner: CSM Corporation Paster Enterprises, LLC Lot 5 Developer & Managing Partner: RLK Incorporated Mosborg Ventures, LLC RSM McGladrey, Inc. Center Manager: Allied Properties & 99% leased, and occupied by Lowe’s, RSP Architects Management, LLC Michaels, Walgreens, M & I Bank, Chin’s Asia Reliance Development Company, LLP Fresh, Potbelly Sandwich Works, Salsarita Leasing Agent: Steven Mosborg Fresh Cantina, Super Cuts, T-Mobile, Palm Robert Muir Company (651) 209-9626, Suntide Commercial Realty, Inc. Beach Tan, Massage Envy and Jamba Juice Solomon Real Estate Group Inc. Architect: Architectural Consortium Market Areas Served: Plymouth, Wayzata Stahl Construction Company Construction Contractor: Stotko Speedling and Western Suburbs TCF National Bank Minnesota Construction Construction Style: Masonry & Steel U.S. Bank GLA: 6,000 sf United Properties Additional Facts: Only one 1,200 sf space left in this padsite development at the primary Venture Mortgage Corporation Current Occupancy: 1,800 sf Dunn Bros with drive-thru and outdoor patio; 3,000 sf Umbria entrance to the project. The building is highly Weis Builders, Inc. Pizza with outdoor patio visible from Vicksburg and directly adjacent to Wells Fargo Bank, N.A. Plymouth Crossings, a new 96-unit senior hous- Number of Stores: 3 Welsh Companies, LLC ing project. Highway 55 pylon signage is still Project Tenants: This 230,000 sf project is available for this last space in the entire project. Westwood Professional Services, Inc. TAX CREDITS continued While $15 billion in NMTC’s may seem a with a lender. But, if the investor and lot of money, it is really a very scarce lender are related entities, that may give properties qualify. In fact, 52% of the resource. The first two allocations of $1 the investor enough comfort to services proposed by allocatees in the first billion and $1.5 billion were combined in compromise on the no-foreclosure NMTC offering were for development or the initial offering. Applications were requirement. rehabilitation of real estate. The latest 2005 submitted by 1,033 CDE’s totaling nearly So what should you do as a real estate awards included $1,340,000 (67%) to $26 billion. Only 66 allocatees received professional interested in NMTC’s? Community Development Entities (CDE) NMTC’s totaling the $2.5 billion offered. Norman L. Jones of the Minneapolis law whose predominant financing activities are Once a CDE receives an allocation it has firm of Winthrop & Weinstine, P.A., who real estate. The largest allocations by the ability to direct the New Market Tax has completed several of these NMTC real property type are mixed-use at $587 Credits to projects that are consistent with estate transactions, makes the following million and retail at $556 million. Multi- its mission. And as you might imagine, a suggestions: family rental properties are specifically successful allocatee is suddenly inundated excluded from NMTC benefits. with many investment opportunities. Determine whether your project(s) is in a low-income area. You can find this A low-income community is defined as at Albert Einstein once said man’s greatest information on the CDFI Fund website least 20% of households are below poverty invention was compound interest. The real after first finding the correct census tract level or median family income below 80% magic in NMTC is achieved through for your project. of the statewide or metropolitan median another one of man’s great inventions — family income level. About 39% of census leverage. For example if you have a $1 Call a NMTC-knowledgeable banker, tracts nationally qualify as low-income million project and are fortunate enough to lawyer or accountant to see how NMTC’s areas. The same 39% applies to Minnesota connect with a NMTC allocatee that has could financially benefit your project. where 510 of 1303 census tracts fall in this available allocations it can use for your See how you can connect with a current category. An investor in a “Qualified project, you can raise $300,000 in equity NMTC allocatee (again listed on the CDFI Equity Investment” receives tax credits from a third-party investor and obtain a Fund website), whether by having your totaling 39% of its investment over a $700,000 loan from your financial banker, lawyer or accountant introduce you seven-year period. institution. This results in the investor’s and your project, by contacting the qualifying investment of $1 million. The The program is administered by the allocatee yourself, or by attending one of financial institution has what should be a Community Development Financial several New Markets Tax Credit conferences. Institutions (CDFI) Fund in coordination sound loan at 70% of project cost that with the IRS and US Treasury. The total of should also translate into good loan-to- Read more at NMTC established by the 2000 legislation value and debt service coverage that will www.newmarketstaxcreditcoalition.org. is $15 billion over seven-years, beginning produce a cash return to the developer. The Those who want to master all the details in 2001. The NMTC’s are distributed via third-party investor is credited with a $1 themselves should get the 2005 New CDE’s that are certified by the CDFI. million qualifying investment that generates Markets Tax Credit Handbook $390,000 of NMTC’s that are taken as www.novoco.com. CDE’s are entities whose primary mission credits against payment of the investor’s In preparing this article, I have been is providing capital to low-income federal income taxes over the next seven surprised at how little application this communities or persons. Some of these years. At the end of seven years, the third- powerful tool has found in the Twin Cities’ entities are community development arms party investor accepts perhaps some small marketplace. Those who have worked with of financial institutions. There are 12 Twin residual interest, but it has essentially it are convinced of its effectiveness in Cities’ based CDE’s on the CDFI Fund’s received its return through NMTC. website. However, it is not necessary to stimulating investment in low-income deal with a local CDE. A full 33% of There is a catch in these leveraged deals areas through its strong benefits to NMTC’s awarded in the first round were called recapture. If the lender were to investors/developers. The program’s for entities that proposed uses in multiple- foreclose on the real estate during the first scarcity is probably due to the lack of state or national locations. seven years, a recapture event would be available allocations, which may not end triggered. In that event all previous tax any time soon. But the good news is there Each year these CDE’s submit competitive credits resulting from this transaction is still time to learn about NMTC and applications for that year’s allocation of would be recaptured. Not surprisingly the position yourself and your project to use NMTC’s. The total authorization of $15 NMTC industry has developed a response the existing allocations or the fresh 2006 billion was divided as follows. 2001: $1 to that potential threat – forbearance. The allocations that come out in April/May. billion, 2002 and 2003: $1.5 billion each, financial institution loan needs to be 2004 and 2005: $2 billion each and 2006 structured in a fashion where the lender and 2007: $3.5 billion each. A CDE cannot will not foreclose and repay its loan in the apply for additional credits until it has used first seven years. Depending on the MSCA And The 50% of the previous years’ allocations. negotiation between investor and lender, Newsletter Committee Currently, applications are in for the sixth the lender may be allowed to take certain Wish You And Yours year (2006) allocations of $3.5 billion that enforcement actions short of foreclosing A Happy New Year! will be awarded in April/May of 2006. and retiring its loan. That’s a tough sell msca news 2006 2 www.msca-online.com MemberBrad Steiner Profiles Title: Relationship Manager Company: Bremer Bank, N.A. Education: Finance degree from University of Wisconsin - LaCrosse Family: Wife, Beth, and daughters Melanie (7) and Katie (5) 2006 LEADERSHIP Dream Job: Professional race car driver or owner of my own hardware store OFFICERS or restaurant President Sara Stafford, LandAmerica Commercial Services Favorite Food: Anything Asian, Mexican, or Spanish 1st Vice President Jay Scott, Solomon Real Estate Group 2nd Vice President Bruce Carlson, United Properties Janele Taveggia, P.E. Treasurer Ken Vinje, Kraus-Anderson Co. Title: Associate, Studio Designer Secretary Kevin Krolczyk, Dalbec Roofing Company: Landform Engineering Company DIRECTORS Wendy Aaserud, Madison Marquette Education: Bachelor of Civil Engineering from the University of Minnesota Peter Berrie, Faegre & Benson LLP Cindy MacDonald, Kraus-Anderson Co. Bill McCrum, Cuningham Group Architecture, P.A. Family: Recently married my husband (Steve) this past November Stefanie Meyer, United Properties Anthony Pasko, Bremer Bank, N.A. Secret Talent: Baton twirling (including fire baton) Robert Pounds, SCSM, Welsh Companies, LLC Immediate Past President MSCA Involvement: Member of the Sponsorship Committee Paul Sevenich, CCIM, Kraus-Anderson Co. COMMITTEE CO-CHAIRS Awards Kim Meyer, United Properties Margaret Jordan, Great Clips, Inc. Community Enhancement December Press releases are printed based upon availability Nikki Aden, Faegre & Benson LLP Member News of space and relevance to the local market. Shelley Klaessy, Brooks Mall Properties Golf Barnard Joins Northstar Partners Westwood Professional Luann Sawochka, Rochon Corporation Peter Armbrust, United Properties Aaron Barnard has recently joined Northstar Services, Inc. Legislative Howard Paster, Paster Enterprises Partners as a retail broker. Westwood Professional Services, Inc. is pleased Todd Johnson, Steiner Development to announce the appointment of Dwight Jelle as Marketing and Communications Reynolds Joins Ryan Companies Tom McGannon, Edwards & Kelcey president of the firm. Sixteen of Dwight’s 20 Matthew Mock, Braden Construction Nick Reynolds has joined Ryan Companies as a years as an engineer have been with Westwood. Membership Retail Sales and Leasing Manager. He will be Former president, Dennis Marhula, remains on Cynthia Hable, Kraus-Anderson Co. doing sales and leasing for Ryan owned and as CEO. Dennis has been with Westwood for Sam Smolley, Smolley Consulting Group Newsletter developed projects. over 23 years and served as Westwood’s Deb Carlson, Northstar Partners LLC president from 1992 to 2005. Christopher Naumann, KKE Architects, Inc. Architectural Consortium LLC Program McGannon Joins Edwards Tom Madsen, Benson-Orth Associates, Inc. Spalon Montage celebrated its grand opening John Tramm, Griffin Companies on December 1 at the new location on the & Kelcey Retail Report Stephanie Carleton, Welsh Companies, LLC second floor of Market Street Station in Tom McGannon joins Edwards & Kelcey as a Molly Bird, United Properties Chanhassen. Architectural Consortium LLC Project Manager of clients for Commercial Technology and Lanak Design provided design and Development and Industrial Projects as part of Cindy MacDonald, Kraus-Anderson Co. construction documents. Skip Melin, Colliers Turley Martin Tucker the Midwest Region in their Minneapolis office. Sponsorship Ned Rukavina, United Properties Bill McCrum, Cuningham Group Architecture, P.A. Search Me MSCA STAFF Looking for ways to keep you organized in the New Year and get strategies for a stress free life. Executive Director - Karla Keller Torp (P) 952-888-3490 (C) 952-292-2414 Check the following web sites out to help you stay on task in the New Year. [email protected] www.mygoals.com Associate Director - Stacey Bonine www.flylady.net (P) 952-888-3491 (C) 952-292-2416 www.memotome.com [email protected] www.ehow.com/how_12076_keep-new-years.html 8120 Penn Avenue South, Suite 114 Bloomington, MN 55431 www.pickmeupbooks.com/subscribefw.html (F) 952-888-0000 msca news 2006 3 www.msca-online.com Gift Card Headaches Consolidation Trepidation According to the accounting firm Deloitte and Touche, a recent survey of nearly 18,000 by Christopher Naumann, KKE Architects, Inc. consumers revealed that almost two-thirds of American shoppers bought an average of more The year 2005 was filled with a re-branding and repositioning of than four gift cards each, for the holidays this frenzy of consolidation activity in the store concepts. Federated has already holiday season. According to the survey, only retail sector. started the to redefine their retailing 48% of the respondents had actually redeemed structure by re-branding such Saks Inc. sold its northern department their cards from the previous year. longstanding concepts as Marshall store group for $1.1 billion in cash to Field’s, Hecht’s, Filene’s, and Since most retailers do not record sales until the Bon-Ton Stores Inc. Shortly there Kaiffmann’s. In their place, the time of redemption, a large influx of cash tends to after, Saks announced it was selling Federated Macy’s concept will be appear on the books of retailers who do a large its Proffitt’s and McRae’s brand expanding to over 850 locations volume of “pre-sales” using these cards. stores to Belk Inc. for $622 million. nationwide. Essentially, this causes large amounts of liquid Not to be outdone, The Neiman liability on balance sheets of retailers who “owe” Marcus Group was purchased by a We also should also expect Federated consumers goods and services not yet redeemed private equity partnership for $5.1 to restructure their retailing by gift card recipients. In fact, the Security and billion. However, the biggest deal of operations in order to be more Exchange Commission is currently examining the the year is the $30 billion merger of efficient and better able to adjust to practice of questionable retailer accounting Federated Department Stores and the market trends in merchandise and practices due to misrepresentation of gift card May Department Store Company. fashion apparel. Utilizing similar sales. Retailers have reacted by adding expiration This merger will bring together some models and methods of national big dates or devaluations of unused cards, but some of the most well known retailing box retailers, we will be seeing states are beginning to outlaw such practices with icons in the nation together into one Federated stores applying new some states even requiring unused balances of family of department stores. tracking and shipping methods for cards to be turned over to the states. merchandise. By linking technologies What does this all mean as we enter the year 2006? Firstly, we should get used to seeing a significant amount of 2006 Event Schedule Consolidation continued on page 9 Our monthly program meeting date is the first Wednesday of every month. All meetings will be held at 8:00 a.m. (registration at 7:30 a.m.) at the Sheraton Bloomington Hotel unless otherwise 2006 The Year of the noted or publicized before the program. Program topics and location are subject to change. Plateau Wednesday, February 1 – Geographic Focus (Source: Christian Science Monitor) Wednesday, March 1 – Industry Trends Thursday, April 6 – Legislative/Business Day According to Economists, the housing that if interest rates increase ate their at the Capitol, Location: TBD market will be a key indicator to the current levels and the real estate Wednesday, May 3 (afternoon) – performance of the United States market slows, the nation’s economic Retailer Focus economy in 2006. Since late 2001, growth rate could be halved as early the national housing market has been as 2007. Real estate sales and home Wednesday, June 7 – Development on fire, with record-breaking housing construction will certainly slow down starts and sales. Fueled by record low and consumers will have less and less interest rates, activity has increased income available for spending. real estate values nationwide. Many Inevitably this will impact the before new consumers entered the housing retailing industry. market or refinanced their existing Although most economists agree a mortgages. The added income from AFTER slowdown in growth will happen this home this home equity and year, there is some debate over how refinancing added to consumers ☺ severe it will be. One thing is certain, discretionary spending and in-turn 2006 will offer some sort of cooling consumer spending across the board from the pace we have become has been high. accustomed to. The year of the Phone (952) 894-5111 Fax (952) 894-0687 Unfortunately, this economic nirvana plateau has arrived. e-mail: [email protected] will not last. Some forecasts predict msca news 2006 4 www.msca-online.com President’s Letter Welcome to 2006! We have an exciting year planned and I invite you to join in the festivities. You won’t want to miss our great line up of monthly programs. Where else can you take advantage of excellent networking opportunities while qualifying for continuing education credits?

MSCA is a fabulous resource for anyone involved in the retail real estate industry. Our diverse membership, About the STARRSM Awards consisting of developers, shopping The MSCA’s Year End Ceremonies, Shopping Center Tribute Awards for Retail Real center owners, brokers, property Estate Awards and Holiday Party were held December 6, 2005, at Midland Hills managers, retailers, attorneys, archi- tects, contractors, title insurance Country Club in St. Paul. Over 280 members and guests attended the evening event. companies, etc. is exploding – the The annual MSCA STARR Awards honor outstanding projects and extraordinary SM highest in our 17 year history. We individuals in the retail and shopping center industry. currently have 676 members and know we will surpass the 700 mark in 2006.

There are many opportunities to get involved. Whether it be on the golf, legislative, marketing or program committees, did you know that there are 11 different committees where you can serve? It’s easy, just pick one of the many committees that best suits your interests and jump in. I challenge you to get involved…and make a difference. You won’t be disappointed as you will find the rewards to be satisfying, both professionally as well as personally. 2005 Committee 2005 STARR Awards Thank you for believing in me to serve SM as your 2006 president. It is an honor to Members Judges be surrounded with a very talented team Front row (left to right): left to right of officers, board of directors, commit- Kim Meyer ~ Robert Muir Company Tom Moorse ~ HTG Architects tee co-chairs, and the many volunteers Jeff Blackwell ~ RLK-Kuusisto Ltd. Laurie Paquette ~ General Growth that contribute to the success of the Margaret Jordan ~ Great Clips, Inc. Properties, Inc. organization. In addition, we wouldn’t Sara Stafford ~ LandAmerica Steve Eggert ~ Target Corporation be where we are today without the commitment, dedication and expertise of Commercial Services Laura Ramme Giertson ~ LRG, LLC Karla Keller Torp, Executive Director Hans Rasmussen ~ Opus Northwest Back row (left to right): and Stacey Bonine, Associate Director. LLC Bill McCrum ~ Cuningham Group Their passion for serving all of you is Architecture, P.A. Kris Schisel ~ Welsh Companies, LLC truly remarkable. Ronn Thomas ~ United Properties Not pictured: Dan Parks ~ Westwood Professional Anthony Pasko ~ Bremer Bank I encourage you to do business with Services, Inc. fellow members. Peter Lund ~ The Cornerstone Group Brett Christofferson ~ Weis Builders, Cheers to 2006, Inc.

Not pictured: Sara Stafford Tricia Pitchford ~ United Properties LandAmerica Commercial Services Mike Sims ~ United Properties 2006 MSCA President

msca news 2006 5 www.msca-online.com Interior Design: Restaurant/Food Service Tryg’s Restaurant ~ Minneapolis Owner: Tryg Truelson Architect/Designer: Shea, Inc. Contractor: Zeman Construction Consultants: Mattson Macdonald Nominees: Buffalo Wild Wings Grill and Bar, Maplewood ~ Stahl Construction Company Caribou Coffee, Moundsview ~ Paster Enterprises Tryg’s Restaurant DQ Grill & Chill, MSP Airport ~ Architectural Alliance French Meadow Bakery and Café, MSP Airport ~ RSP Architects Kozy Restaurant, Edina ~ Shea, Inc. Northern Lights Grill, MSP Airport ~ RSP Architects Sköl Café & Bar, MSP Airport ~ Morcon Construction Interior Design: Retail/Non-Food Service Kowalski’s Market ~ Lakeville Owner: Paster Enterprises Architect/Designer: Gorski & Associates / Harriss Architects Contractor: Zeman Construction Nominee: LIV Aveda Salon and Spa, Mankato ~ Paulsen Architects Kowalski’s Market Design & Aesthetics: Retail under 50,000 S.F. Market Street Station ~ Chanhassen Owner: Market Street Station, LLC Developer: Kraus-Anderson Realty Company Architect: Bentz/Thomspson/Rietow, Inc. Contractor: Kraus-Anderson Midwest Division Consultants: Dahlgren Shardlow and Uban / Lan-De-Con Inc. / Doody Mechanical / Weber Electric, Inc. / BKBM Engineers Leasing: Kraus-Anderson Companies Nominees: Minnesota!, MSP Airport ~ Architectural Alliance Market Street Station Radio Road, MSP Airport ~ Architectural Alliance Rosemount Crossing, Rosemount ~ Steiner Development, Inc. Tamarack Village Expansion, Woodbury ~ Robert Muir Company Design & Aesthetics: Retail 50,000 - 250,000 S.F. Nicollet Plaza ~ Burnsville Owner: H.J. Development, Inc. Developer: Opus Northwest LLC / Klingelhutz Residential Partners Architect: KKE Architects, Inc. Nominees: Argonne Village, Lakeville ~ Weis Builders, Inc. Lakeville Crossing Phase II, Lakeville ~ Paster Enterprises Shoppes at Lyndale Green, Bloomington ~ United Properties Nicollet Plaza The Shoppes of Oak Park, Oak Park Heights ~ Solomon Real Estate Group Design & Aesthetics: Shopping Centers Over 250,000 S.F. Silver Lake Village ~ St. Anthony Owner & Developer: Robert Muir Company Architect: Architectural Consortium LLC / KKE Architects, Inc. Contractor: Muir-Doran Construction / Weis Builders, Inc. (Wal-Mart) Consultants: Anderson-Urlacher, P.A. / URS / W.J. Sutherland and Associates, Inc. Leasing: Robert Muir Company Silver Lake Village Nominee: Woodbury Commons, Woodbury ~Robert Muir Company msca news 2006 6 www.msca-online.com DevelopmentDesign & Aesthetics: Process ShoppingArgonne Centers Village over~ Lakeville 250,000 sf Owner & Developer: UnitedRiverdale Properties Village ~ Coon Rapids Architect: KKE Architects, Inc. / Architectural Consortium LLC Owner: Macquarie DDR Trust (MDT) Contractor:Developer: United Developers Properties Diversified / Weis Builders, Realty Corporation Inc. Consultants:Architect: W KKEestwood Architects, Professional Inc. Services, Inc. Contractor:Leasing: Un J.E.ited Dunn Properties – North Central Consultants:Nominees: Shoppes Westwood at Lyndale Professional Green, Services Bloomington ~ United Properties SilverAnderson-Urlacher, Lake Village, St. P.A. Anthony ~ Robert Muir Company RiverdaleArgonne Village Leasing: Developers Diversified Realty Corporation Photography: PhilipRenovation Prowse Photography / Remodel Crystal Shopping Center ~ Crystal Development Process: Owner & Developer: Paster Enterprises Crossroads Center Expansion ~ St. Cloud Architect: KKE Architects, Inc. Contractor:Owner: Weis General Builders, Growth Inc. Properties, Inc. Developer: General Growth Properties, Inc. Consultants:Architect: N KKEelson-Rudie Architects, Associates Inc. / RLK-Kuusisto Ltd. Contractor:Leasing: Paster VCC Enterprises Consultants:Nominees: Lupient Meyer BuickBorgman GMC Johnson Pontiac, Golden Valley ~ MichaudMidwest Cooley Maintenance Erickson & Mechanical, Inc. MinneapolisSchuler Shook City Center, Minneapolis ~ Crystal Shopping Center WestwoodBrookfield Professional Properties Services (US) LLC Crossroads Center Expansion Leasing:Rockford General Mall,Growth Rockford Properties, ~ Welsh Inc. Companies, LLC Rivertown Village, St. Cloud ~ Robert Muir Company Nominees: Mound Marketplace, Mound ~ Mound Marketplace LLC South Fork Plaza, Lakeville ~ Welsh Companies, LLC Southwest Station, Eden Prairie ~ North American Properties South Lake Village Shopping Center, Prior Lake ~ SuntideRenovation Commercial / RealtyRemodel: Southdale Square Shopping Center, Richfield ~ Famous Dave’sMadison BBQ/Kokomo’s Marquette Island Cafe ~ Bloomington Owner:Two Tim Rivers and Pat Place, Buffman Mankato ~ Paulsen Architects Architect: RSP Architects Redevelopment Contractor: Zeman Construction ShoppesWeber at Electric Lyndale Green ~ Bloomington Owner & Developer: UnitedYale MechanicalProperties Shoppes at Lyndale Green Architect: DDakotaesign Group Plumbing Services / Planmark / JSSH Famous Dave’s BBQ/ Consultants:Contractor: United Ericksen Properties Roed & / CopelandAssociates Building Corporation / Kokomo’s Island Cafe WeisApropos Builders, Inc. Shuler Shook Consultants: ArchitecturalThemescapes Consortium, LLC / Brauer & Associates Leasing: United Properties Nominees: Target, Crystal ~ J.E. Dunn – North Central Additional: MSAYorkdale Environmental Shoppes, EdinaConsulting ~ KKE / Bloomington Architects, Inc. HRA Nominees: Menards - Midway, St. Paul ~ Kraus-Anderson Construction Co. MinneapolisRedevelopment: City Center, Minneapolis ~ LibertyBrookfield Frozen Properties Custard (US) ~ MinneapolisLLC University Square Development, Mankato ~ Paulsen Architects Owner:Woodbury Vicky and Commons, Steve Uhr Woodbury ~ Robert Muir Company Fulton Lofts Architect: KKE Architects, Inc. Contractor: Watson-ForsbergMixed-Use Co. Consultants: Anderson-Urlacher,Fulton Lofts P.A.~ Minneapolis Liberty Frozen Custard Nominees:Owner: 3100 Foley 50 thPlaza, Street CoonDevelopers Rapids LLC ~ Gaughan Properties Developer/Contractor: MarketplaceMaster: Engineering, Lofts, Hopkins Real Estate ~ Kohnstamm & Construction Communications Consultant/Leasing: Master: Engineering, Real Estate & Construction Congratulations! Architect: Tushie Montgomery Thank you for your Congratulations!Nominees: Hiawatha Square, Minneapolis ~ dedication and for Master: Engineering, Real Estate & Construction enhancing our industry. Thank you for yourMarket Streetdedication Station, Chanhassen ~ Kraus-Anderson Companies Shoppes at Lyndale Green, Bloomington ~ United Properties and for enhancingSilver Lakeour Village, industry. St. Anthony ~ Robert Muir Company

msca news 2006 7 www.msca-online.com Individual Awards Thank you to our

Shining STARRSM 2005 Corporate Sponsors

Tedd Schuster Adolfson & Peterson Construction Madison Marquette The Avalon Group Barna, Guzy & Steffen, Ltd. Nominated Project: Bremer Bank, N.A. Southdale Square Shopping Brookfield Properties (US) LLC Center ~ Richfield The Business Journal CB Richard Ellis CSM Corporation Cambridge Commercial Realty Colliers Turley Martin Tucker The Collyard Group L.L.C. Commercial Partners Title, LLC Cuningham Group Architecture, P.A. Award of Excellence Dalbec Roofing Exeter Realty Company Faegre & Benson LLP Mike Scott Fantastic Sams United Properties General Growth Properties, Inc. Gray Plant Mooty Great Clips, Inc. H.J. Development, Inc. Heitman Financial Services LLC J.E. Dunn – North Central J.L. Sullivan Construction, Inc. Jones Lang LaSalle KKE Architects, Inc. Kraus-Anderson Companies LandAmerica Commercial Services Landform Committee Members Larkin Hoffman Daly & Lindgren Ltd. of the Year LaSalle Bank N.A. M & I Bank Madison Marquette Cynthia Hable Messerli & Kramer, P.A. Kraus-Anderson Midwest Maintenance & Mechanical, Inc. Companies NorthMarq Capital, Inc. Northtown Mall/ Glimcher Properties Tom Madsen Oppidan, Inc. Opus Northwest, L.L.C. Benson-Orth Associates, Park Midwest Commercial Real Estate Inc. Paster Enterprises, LLC RLK-Kuusisto Ltd. RSM McGladrey, Inc. RSP Architects Member of the Year Reliance Development Company, LLP Robert Muir Company Ryan Companies US, Inc. Bill McCrum SUPERVALU INC. Cuningham Group Target Corporation Architecture, P.A. TCF National Bank Minnesota Towle Financial Services U.S. Bank United Properties Venture Mortgage Corporation Weis Builders, Inc. Wells Fargo Bank, N.A. Welsh Companies, LLC Westwood Professional Services, Inc.

msca news 2006 8 www.msca-online.com CONSOLIDATION continued these deals become solidified, store 2006 Store concepts may be closed, or completely Openings/Closings to stores will allow consumers access to absorbed by competitors. Companies will merchandise and fashion apparel in very be consolidating spaces, relocating staff, Opening Closing efficient cycles. This will allow stores to and tweaking their operations. We may see follow fashion and seasonal trends in a locations go dark or concepts simply Dollar General 800 very effective manner. No longer will vanish. We may even see new concept Costco 28-30 some department store concepts be hybrids emerge with new stores or Casual Corner 525 wrestling with winter overstock in August. renovations. We might even be witnessing Target 110 No longer will we see the stale fashion the re-birth of the great department store Wal-Mart 550-600 sense stigma of older, larger department becoming, once again, centric to the Super 270-280 stores. Federated believes that with this retailing industry as a whole. Regardless, merger, it will become a leaner and meaner Discount 20-30 department stores are currently reeling a retailing force with significant impact on bit from the tumultuous atmosphere of Neighborhood 15-20 the entire industry. consolidation that was experienced in 2005 Sam’s 30-40 and we will continue feeling the The consolidation that has occurred with International 220-230 impact not only this year, but for many retailers in the past year will not just cause Federated 6 years to come. adjustments to brands and operations. As Jos. A. Banks 50-65 Kohl’s 200 Top 10 Largest Shopping Centers in the Twin Cities Circuit City 25-30 Walgreen’s 475 (as published by the Mpls/St. Paul Business Journal) CVS 275-300 Mall of America: 2,789,000 sf; 96.7% occupied (Simon Debartolo) Lowe’s 150 Southdale Center: 1,400,000 sf; 100% occupied (The Mills) Eden Prairie Center: 1,151,000 sf; 87.62% occupied (General Growth) Burnsville Center: 1,056,000 sf; 98.47% occupied (CBL & Assoc Properties) Bookmark Ridgedale Center: 1,044,000 sf; 97.89% occupied (Ridgedale Shopping Center) Brookdale Center: 1,013,157 sf; 62.46% occupied (Austin & Associates) Looking to revamp your financial Northtown Mall: 976,239 sf; 71.52% occupied (Glimcher Properties) portfolio for 2006? Rosedale Shopping Center: 970,000 sf; 94% occupied (Jones Lang LaSalle) How to Get in and Out of the Market Maplewood Mall: 913,000 sf; 92% occupied (NP) with Huge Gains in any Climate by J. Riverdale Village: 872,507 sf; 100% occupied (Developers Diversified Realty) Christopher Amberger. The trading systems explained in this book have perhaps the best track record in the Top Biggest Real Estate Sales for Retail Centers industry, and found nowhere else. They (as published by the Mpls/St. Paul Business Journal) use a combination of analytical components, focusing on trading, as Out of the top 25 commercial real estate sales (ranked by sale price) that occured in opposed to investing and are all about 2004, three of the transactions were retail properties: hard-core technical analysis. No. 16: Birch Run Station, Maplewood Bull Market: Tracking Todays Hottest Tenants: JoAnn Etc, Marshalls, Office Max, Burlington Coat Factory Investments by Dan Denning. A $26,360,000 personal road map to making big No. 19: Rosedale Square, Rosedale money in the days ahead, detailing Tenants: Byerlys, Office Depot exactly where you should be looking, $25,214,000 what you should be looking for (or No. 25: Ridgehaven Mall avoiding) and why. Tenants: Byerlys, Barnes & Noble $20,000,000 The Demise of the Dollar: And Why It’s Great for Your Investments by Addison Wiggen. This book explores why the Rents and Vacancies 2006 dollar is in its current state, laying out methods in which investors must adjust Shopping Centers Today reported in December that retail vacancies in the United their portfolios for successful results. States will drop to an average of 8.8% in 2006. They also report that rent grown will increase to 3.5% this next year. According to the Marcus and Millichap’s retail group, Contact Deb Carlson at tenant demand is driving 70% of developments planned for 2006. Cap rates are [email protected] with predicted to remain at all time lows between 6 -7.5%. Retail values are predicted to your reading recommendation. increase between 8-10%, about half the average 20% increase that occurred in 2005. msca news 2006 9 www.msca-online.com MarketRoseville RejuvenationUpdate

by Sara Martin, Welsh Companies, LLC

n a metro area ripe with many combination of entertainment and upscale (residential) and a Roseville Properties significant redevelopment projects, the retailers. The Plaza at Rosedale Center will Affiliate, which is jointly owned by Daniel IRosedale Mall trade area has remained be the first super regional shopping center Commers, John Johannson and Chris one of the strongest in the region. Low in the Twin Cities trade area to combine Simmons. The project will consist of 940 vacancy and high traffic has kept this trade entertainment, lifestyle and fashion housing units, 350,000 sf of retail space area among the most active, sought after in retailers in an open-air, mixed-use style and 280,000 sf of office space. The the Twin Cities with more than 12 million design. Convenience and easy pedestrian housing component of the development shoppers visiting the mall each year. For access between the Center and Plaza are at offers major relief to Roseville. While the years, Roseville has been a competitive the heart of the project’s design. AMC city is among the most dense and highly trade area with little to no new Theaters signed on as Prime Property profitable retail centers in the region, development and very few opportunities Fund’s first tenant for occupancy in August Roseville currently has very limited for new retailers to find space, but all that of 2006 and is expected to bring a 14- housing options and is in desperate need of is about to change with the addition of two screen state of the art theater. The only more space for small businesses. The retail large projects that will significantly alter other tenant that has been announced at portion of the project will be anchored by this trade area as we know it today. this time is Granite City Food & Brewery, Costco and will include a good mix of a premier casual dining restaurant, which junior anchors and restaurants as well as The first major project in the works is the will also be a great addition to The Plaza. 60,000 sf of small shop space. complete redevelopment of the 185,000 sf former Mervyn’s wing of the Rosedale The second new addition to the Roseville Given the historical high demand and high Mall. A lifestyle center addition known as landscape is the new 70-acre Twin Lakes volume of the Roseville trade area, these “The Plaza at Rosedale Center” is development, expected to break ground in new developments seem long overdue and currently under construction and expected the spring of 2006. This mixed-use a welcome addition to the region. to open in the fall of 2006. The project, development is bordered by County Road Moreover, with several large tenants under development by Prime Property C2 at the North, County Road C at the signed on to the projects and a long list of Fund, is projected to cost more than $50 South, Cleveland Avenue at the West and retailers who have been unable to find million and will include two stories of Fairview Avenue at the East. Twin Lakes is space to break into the area in recent years, outward facing storefronts that will be a a joint development by Rottlund Homes both projects seem poised for success.

RisingThe Fitness Star Frenzy by Betty Ewens, CLS, Kraus-Anderson Companies t’s a new year and a great time for new see nothing but growth ahead for this Liberty Fitness, a nationally franchised resolutions. One of mine is to shape up franchise. They currently have over 60 women’s exercise concept, is just about to Iand shed those holiday pounds. I don’t centers either open or coming soon in open its first Minnesota club in need to go very far to find help. In my Minnesota alone and have close to quadru- Chanhassen, and more stores are planned neighborhood alone, at least two new clubs ple that number of locations nationally. in Minnesota in the near future. Liberty have opened up within blocks of my home. Fitness received a ranking in the top 50 Snap Fitness is another Minnesota-based No frills exercise clubs conveniently new franchises in 2005 by Entrepreneur franchise with approximately 50 club located in our neighborhoods are the Magazine. Founded by Liberty Harper, a locations in the Twin Cities as well as steady gainers this year. 25-year-old entrepreneur, the club focuses outstate Minnesota. They also feature 24/7 on a total body approach consisting of Anytime Fitness is one of the newest access by security card to ensure that busy fitness, nutrition, and wellness for women. players in this field. Based in West St. members can work out at all hours. Paul, Anytime Fitness began in 2002 and Founder Peter Taunton expects to continue www.anytimefitness.com is now ranked 10th in the top 25 chains, to open 5 to 7 new sites monthly through www.snapfitness.com according to the International Health, Minnesota and nationally, looking www.libertyfitness.com Racquet, & Sportsclub Association. primarily for neighborhood center class Founders Jeff Klinger and Chuck Runyon “B” locations.

msca news 2006 10 www.msca-online.com AroundRetail Tidbits the Marketplace compiled by Tim Hilger, Diversified Acquisitions, Inc.

● Private equity firms are advising is Stefan Persson and is one of the 50 12th Street; George Dayton was asked to McDonald’s that it has huge undervalued richest people in the world; 1,100 + stores buy the land, which he did; he bought out a asset values hidden in real estate holdings. world wide in 22 countries and 84 stores in “dry-goods” retailer and opened a three story These large investors want it to free up the U.S; 100 in-house designers create all department store in 1902 that flourished. some of these assets, estimated at $24 their fashions; sales exceed $6 billion ● Marshall Field’s factoids: founded by billion, by selling them through the annually; nickname is “the Ikea of Marshall Field who entered retailing in 1852 sale/leaseback process. Counting this clothing”; first Minnesota store is in the in Chicago; at one point he had 2 other argument are others who believe that the Mall of America. partners; first store called Field, Palmer added rental expense will be at a higher ● The Dayton Department Store name is and Leiter located on State Street; burned rate than McDonald’s ability to borrow at gone and soon to follow is the Marshall in the great Chicago fire of 1871; operated lower rates. Field’s name. Here are some factoid: in a temporary building for eight years; the ● H&M trivia factoids: H&M stands for George Dayton was initially a merchant new store opened on State Street site of the Hennes & Mauritz; the name Hennes is banker not a retailer; the famous present store; across State Street from the Swedish for “her”; home base is Westminster Church first located at the site main department Field operated a 20 story, Stockholm Sweden; founded in 1947 as a where Marshall Field’s store is presently 400,000 sf Store for Men; you could buy women’s apparel store; it went coed in located in Minneapolis; the church burned, golf clubs or a gun and test fire it in one of 1968; the founder’s son and present CEO then relocated to its present location on the store’s three basement rifle ranges.

msca news 2006 11 www.msca-online.com Minnesota Shopping Center Association 8120 Penn Avenue South, Suite 114 Bloomington, MN 55431

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