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HomeMy WebLinkAbout05-27-14AGENDA Economic Development Commission May 27, 2014 — 4:30 p.m. City Hall, Marion Conference Room 1. Call to order 2. Approval of April 22, 2014 minutes 3. Menasha Packaging Project Update 4. Update on 2014-16 Strategic Plan for Economic Development Work Program 5. Directors Report 6. Adjourn Attachments: April 2014 Building Permit Report "State Sheds 4,300 Jobs in April," Minnesota Department of Employment and Economic Development News Release, May 15, 2014 "In the Twin Cities, industrial real estate is a hot commodity," StarTribune, May, 2014 "Supervalu, Lunds buying 18 Rainbow stores in Minnesota," Minneapolis/St. Paul Business Journal, May 7, 2014 item No. � CITY OF LAKEVILLE DRAFT ECONOMIC DEVELOPMENT COMMISSION MEETING MINUTES April 22, 2014 Chair Starfield called the meeting to order at 4:30 p.m. in the Marion Conference Room at City Hall. Members Present: Comms. Starfield, Matasosky, Longie, Emond, Tushie, Joe Julius, Lowell Collman, Ex -officio member City Administrator Steve Mielke. Members Absent: Comms. Smith, Vlasak, Mayor Matt Little, Ex -officio member Lakeville Area Chamber of Commerce Executive Director Todd Bornhauser. Others Present: David Olson, Community & Economic Development Director; Adam Kienberger, Economic Development Specialist; Mark Lofthus, Dakota Electric Association. 2. Approval of March 25, 2014 meeting minutes Motion Comms. Matasosky/Emond moved to approve the minutes of the March 25, 2014 meeting as presented. Motion carried unanimously. 3. Introduction of New EDC Members Lowell Collman & Joe Julius Newly appointed EDC members Lowell Collman and Joe Julius were introduced to the EDC. 4. Election of Officers The EDC discussed and nominated Officers to serve the positions of Chair, Vice Chair, and Secretary for 2014. Motion Comms. Matasosky/Tushie moved to approve the selection of Officers to serve for 2014: Chair — Glenn Starfield Vice Chair — Sheila Longie Secretary — Joe Julius Motion carried unanimously. 5. Dakota Electric Presentation — Mark Lofthus, Economic Development Director Mark Lofthus, Economic Development Director for Dakota Electric Association (DEA) provided the EDC with a presentation on DEA's economic development activities and programs. Economic Development Commission Meeting Minutes, March 25, 2014 Page 2 6. Menasha Packaging TIF Project Update Mr. Olson provided the EDC with a handout summarizing the Menasha Packaging TIF agreement. City Council approved the development agreement on April 21s` Comm. Matasosky stated that it is important to present the proper details on this type of project so that people can easily understand the benefits and value of TIF. Comm. Longie noted that Dakota County doesn't recognize the retention aspect of the project and how that plays a role in the process. Mr. Olson and Mr. Mielke added that Dakota County provided a negative recommendation on the Lakeville TIF agreement with Menasha due to philosophical differences on Economic Development TIF districts. Cities need to continue to work to demonstrate the benefits of greenfield TIF projects in Dakota County. 7. Update on 2014-16 Strategic Plan for Economic Development Work Program Mr. Kienberger provided an update on the status of the 2014 Work Program items detailed in the 2014-2016 Strategic Plan for Economic Development. 8. Director's Report Mr. Olson reviewed the Director's Report. 9. Adjourn Meeting adjourned at 5:50 p.m. Respectfully submitted by: Adam Kienberger, Recording Secretary Lakeville Memorandum item No. 3 City of Lakeville Community & Economic Development To: Economic Development Commission i From: Adam Kienberger, Economic Development Specialist Copy: David L. Olson, Community & Economic Development Director Steven Mielke, City Administrator Date: May 23, 2014 Subject: Menasha Packaging Project Update Menasha Packaging is proposing a 123,000 square foot expansion to their 238,000 square foot manufacturing facility located in the Airlake Industrial Park. In addition to retaining 221 jobs in Lakeville, the proposed expansion will create 15 jobs within the next two years. The City Council approved a TIF agreement with Menasha Packaging on April 21, 2014 to assist with eligible site development costs. Menasha Packaging Company has recently completed an application to be submitted to the Minnesota Department of Employment and Economic Development (DEED) for the newly created Job Creation Fund Program. The Job Creation Fund Program provides financial incentives to new and expanding businesses that meet certain job creation and capital investment targets. Companies deemed eligible to participate may receive a benefit based on actual jobs created and for constructing or renovating facilities or making other property improvements. The program is available to businesses engaged in manufacturing, warehousing, distribution, technology -related industries, and other eligible activities. Companies must work with the local government (city, county or township) where a project is located to apply to DEED to receive designation as a Job Creation Fund business. A summary page on the newly created Job Creation Fund Program is attached. Recommended Action: No action required. This is an update on the progress of the Menasha Packaging expansion and the Job Creation Fund Program. Minnesota Job Creation Fund Program Program Overview The Job Creation Fund (JCF) program is DEED's newest program to encourage job creation and capital investment in new or expanding businesses. The program provides job creation awards of up to $500,000 and capital investment rebates of up to $500,000 for qualifying businesses. Eligibility Businesses may apply through a local government where their new or expanding business will be located and must be primarily engaged in manufacturing, warehousing, distribution, IT, or other eligible activities. At minimum, a business must: Invest $500,000 in real property improvements within one year of designation as a Job Creation Fund Business; and, Create 10 new full-time, permanent jobs within two years of designation as a Job Creation Fund Business; and, • Obtain a resolution of support from the local government where the business will be located. Benefits A business approved and designated by DEED for the program may request benefits after entering into a business subsidy agreement with DEED, making an investment of at least $500,000 within one year, and having at least 10 new permanent full-time jobs in place for one year. Benefits include: • Up to 7.5°x6 rebate on capital investment in real property improvements in Greater Minnesota • Up to 5% rebate on capital investment in real property improvements the Twin Cities Metro • Between $1,000-$3,000 per new permanent full-time job per year, based on cash wages paid • All new jobs must pay at least $12.48 in total compensation • All wage and compensation levels are adjusted annually Provisions for Large Projects Businesses making a capital investment of more than $25 million may be eligible for these JCF awards: • Up to $2 million ($1 million in capital investment rebates and $1 million in job creation awards) if the business creates at least 200 full-time permanent jobs. • Up to $1 million in capital investment rebates for projects that will retain at least 75 full-time permanent jobs in Greater Minnesota or 200 in the Twin Cities metro area. Although equipment may be counted toward large project eligibility, the capital investment rebate only applies to the expenditures related to real estate — land and building — improvements. For More Information Application materials, frequently asked questions and other information can be found at http://mn.gov/deed/`business/ 1/10/14 Business and Community Development Division 1st National Bank Building ■ 332 Minnesota Street, Suite E200 ■ Saint Paul, MN 55101-1351 USA ■ www.positivelyminnesota.com Toll Free: 800-657-3858 ■ Phone: 651-259-7114 ■ Fax: 651-296-5287 ■ TTY: 651-296-3900 An equal opportunity employer and service provider. L I'tem No. � City of Lakeville Community & Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: David L. Olson, Community & Economic Development Director Steven Mielke, City Administrator Date: May 23, 2014 Subject: Strategic Plan for Economic Development Work Plan Update The City Council accepted the EDC's 2014-2016 Strategic Plan for Economic Development at their January 6, 2014 meeting. This plan provides the EDC and staff with a basis to focus on specific initiatives during this three-year period. The Work Plan discussed at the EDC's February meeting serves as the foundation for the activities staff will pursue in 2014. Please find below a summary of the progress made on the 2014 Work Plan: Business Retention and Expansion o Working with Greater MSP/DEED/MN Chamber on a system for better tracking business visits ■ Secured a partnership agreement to utilize Salesforce CRM software to help better track and manage BR&E activities Incentives and Tools to Achieve Success o Coordinating website updates with the Communications Department ■ Includes "Development Toolbox" and Google maps project updates ■ Becoming more familiar with the new Job Creation Fund program at DEED by working with DEED staff on the Menasha Packaging application Enhancing a Pro Business Climate o Updating Commercial/Industrial Building Permit Application o Exploring online survey tool options for a revised development survey ■ Ready to utilize Survey Monkey account High Density Housing o Discussed with the EDC at February and March meetings o Maxfield Research and Dakota County CDA staff are scheduled to present recent housing study findings to the City Council at their Jun e 23rd Work Session Recommended Action: No action required. The attached is an update on the progress of the Strategic Plan for Economic Development. item No. 5 City of Lakeville Community & Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Steven Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: May 23, 2014 Subject: May Director's Report The following is the Director's Report for May, 2014. Building Permit Report The City has issued building permits with a total valuation of $40,520,312 through April. This compares to a total valuation of $43,245,740 through April of 2013. The City issued commercial and industrial permits with a total valuation of $2,231,000 through April compared to a total valuation of $5,343,750 during the same period in 2013. The City has also issued permits for 103 single family homes through April with a total valuation of $35,326,000. This compares to 104 single family home permits through April of 2013 with a total valuation of $231,595,000. The 103 single family home permits issued through April, 2014 was the highest number of residential permits for April and year-to-date in the Metropolitan Area based on figures released by the Builders Association of the Twin Cities. BTD Manufacturing Training Grant Attached is a Press Release issued by the MN Department of Employment and Economic Development announcing the award of a $300,000 Job Skills Partnership grant to Dakota County Technical College to provide robotic welding training to employees of BTD. This program requires matching funds from the company which in the case of BTD, will be over $600,000. A grant signing ceremony was held last Friday at one of BTD's Lakeville facilities and was attended by the Mayor and several Council Members along with Adam and myself and Todd from the Chamber. BTD is a contract and custom metal works manufacturer and has contracts with 3M, Artic Cat and Cummins to name a few. BTD is one of the fastest growing companies in our industrial park. Lakeville Job Fair The City hosted its second Lakeville Business Job Fair at the Lakeville Heritage Center this past Thursday, May 22nd from 9:00 to 1:00. There were ten (10) Lakeville businesses that participated. Unfortunately attendance was down considerably from last year with only 50- 75 job seekers attending. According to Mark Jacobs with the Dakota -Scott Workforce Center, attendance has been down considerably at other job fairs this year as well. His agency hosts a large county -wide job fair in March every year and this year attendance was down almost 50% from last year. We will continue to work with the Workforce Center and local employers on how best to hold job fairs in the future. Adam's New Position Adam's last day with the City is May 29th. He starts his new position as Community Development Director for the City of Farmington on May 30th. I am personally happy for Adam and this career advancement opportunity he will be embarking. He has been a great employee for the City of Lakeville for the past 8 '/z years. For EDC members that are interested, we are planning to stop by Main Street After Hours after the EDC meeting. DEED Awards Training Grant for 290 Employees at BTD Manufacturing Page 1 of 1 SHARE THIS DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT �� NEWS RELEASE DEED Awards Training Grant for 290 Employees at BTD Manufacturing Employees will receive robotics welding training at DCTC May 19, 2014 Contact: Madeline Koch, 651-259-7236 Madeline.Koch®state.mn.us(mai Ito: Madeline, Koch@state.mn.us) ST. PAUL — The Minnesota Department of Employment and Economic Development has awarded a $300,000 grant to Dakota County Technical College to train 290 employees of BTD Manufacturing, headquartered in Detroit Lakes. The grant was awarded under the agency's Minnesota Job Skills Partnership Program. The program works strategically with both businesses and educational institutions to train or retrain workers, expand work opportunities and keep high- quality jobs in the state. In this grant, the program leverages more than $608,000 from BTD Manufacturing. "The new robotic welding curriculum, supported by this grant, will enhance Dakota County Technical College's capacity to extend training to other interested manufacturers and individuals," said DEED Commissioner Katie Clark Sieben. "In addition, DCTC will use this project as leverage to attract young women to manufacturing through their Teens Experiencing Technical Education program." More than $135 million has been awarded to educational institutions to train 265,487 Minnesota workers, since the Minnesota Job Skills Partnership Program began in 1983. BTD Manufacturing provides a range of contract and custom metal works manufacturing for some of the world's top brands, including 3M, Arctic Cat and Cummins. MJSP funding will support a partnership to customize curriculum for employees at their Detroit Lakes and Lakeville locations. Training will include robotic welding, tool making, electrical systems, computer training, management and leadership, fabrication, mechanical systems, hydraulic training, OSHA safety training and continuous improvement. It is anticipated the onsite training will improve the technical skills of the workforce and help BTD meet increased productivity goals. t For more information on the grant, contact Larry Lewis, Business and Management Coordinator, Dakota County Technical College, 651-423-8276. DEED is the state's principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and our services, visit us at htto://mn.gov/deed/ (htto //.nn aov/deed/) . Follow us on Twitter at twitter.com/mndeed (htto //www twitter coin/mndeedl . -30- Upon request, this information can be made available in alternate formats for people with disabilities by contacting the DEED Communications Office at 651-259-7161. http://mn.gov/deed/newscenter/press-releases/newsdetail jsp?id=466-129980 5/20/2014 5/23/2014 SunThisweeki Farmington hires new coffrunitydevelopmentdirector sunthisweek.com http://s unthisweek.com/2014/05/21 /f"arm ington-hires-new-com m u nity-development-director/ Farmington hires new community development director Lakeville staff member takes the new job by Jennifer Chick Sun Thisweek Dakota County Tribune As Farmington anticipates future growth in one of the fastest growing areas in the Twin Cities metro, the City Council has hired a new community development director. Adam Kienberger was approved to fill the community development director position at the council's meeting Monday night. Currently, Kienberger is the economic development specialist for Lakeville where he coordinates economic development activities and acts as a liaison to several private and public sector partner organizations. "I'm very excited for Adam to come over here and get started," Farmington Mayor Todd Larson said. "I'm excited for him to bring his knowledge and skill set to Farmington." Farmington City Council members have placed economic development as one of the city's top priorities in the coming years, and in March, the City Council approved the addition of a community development director position to the city staff. The position was reestablished due to a staffing change after Farmington's city planner, Lee Smick, was dismissed. Kienberger will begin his new job on May 30. "It's a great opportunity, and I'm excited to make the transition to Farmington to help continue to build the community," Kienberger said. Working in economic development, Kienberger said, is about doing something different every day. "You are always working with different aspects of a community," he said. "There is such a diversity of subject matters you get to learn and work on with the community." http://sunthisveekcorTV2014/05/21tfarrtington-hires-new-cor mnity-development-director/ 1/2 5/23/2014 SunThisweekl Farmington hires newcoffrwnitydevelopmentdirector He said enjoys making connections and bringing partners together. When Farmington reestablished the position in March, Dave McKnight, Farmington's city administrator, said the person who fills the new position will oversee planning, economic development, building inspections, heritage preservation and code enforcement. This position will also be a liaison to Economic Development Authority, the business community, Farmington Business Association, Dakota County Regional Chamber, Met Council and Dakota County Community Development Agency. "Economic development is a team sport," Kienberger said, "and everyone needs to be on the same page to be successful." Before working for Lakeville, Kienberger worked for the Minnesota Department of Employment of Economic Development as a senior grants specialist in the Brownfields/Redevelopment/JOB unit. He has also worked for the city of Woodbury as the economic development assistant. He has a bachelor's of science degree in urban and regional studies from Minnesota State University, Mankato, and an economic development certificate from Hamline University. He is an active member of the Economic Development Association of Minnesota and is a member of DEED's Minnesota Marketing Partners. http://sunthisweekcam2014/05/21/farrrington-hires- new-comrwmity-development-director/ 2/2 April 2014 Building Activity Past Twelve Months Permits Permitted Units Permit Value April 2013 372 817 134,217,869 ' _ cA ,;���� :•i;, �;P�. s- �,,_ffi" fir; ".l �: �`fj JJ�ujn�e 20713 496 �9j12 172,571,275 J� AtIMM August 2013 494 1,114 175,144,693 `," + . a • lam'_ _ -- October 2013 487 1,029 194,733,683 December 2013 398 1,011 173,989,650 February2014248 408 107,822,430 a �.Ii7�Y "��"",� _ - •s;�; -"�, ow�Vft h;$`1(,�r' NN M.9 a April 2014 350 744 3 123,276,172 Five -Year Comparisons Permits Permitted Units Permit Value April 2011 203 230 58,830,532 Apri12013 I 372 I 817 I 134,217,869 Permits Permitted Units Permit Value YTD 2011 758 851 229,397,675 YTD 2013 _....___. 1,386 2,475 514,721,124 Multifamily Construction as a Percentage of Total Activity May -131 Jun- 13 Jul- 13 Aug -13 Sep -13 I Oct- 13 Nov -13 Dec -131 Jan- 14 Feb -14 Mar -14 Apr- 14 YTD -14 44 48 1 27 1 55 1 68 1 52 1 37 1 62 1 64 1 43 1 27 1 54 1 52 Top Cities for Building Activity April 2014 Year -to -Date Permits Permitted Units Permits Permitted Units Lakeville 28 Minneapolis 400 Lakeville 110 Minneapolis 829 Blaine 23 Lakeville 28 Plymouth 94 Eagan 236 Plymouth Woodbury 23 22 Blaine 26 Plymouth 23 Woodbury 85 Golden Valley 168 Minneapolis 20 Woodbury 23 Blaine 76 Lakeville 112 Minneapolis 61 Moundsview 99 The Bnildera Assocrotum afthe Trani Cities hos contracted rotth Keystone Report, a local research frrnt to mnmtnrn a database with nifornmtron about new residential construction permits around the metropohtan area. 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PAUL — Minnesota employers shed 4,200 jobs in April, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED). March figures were revised downward from 2,600 jobs gained to 700 jobs gained. The unemployment rate fell to a seasonally adjusted 4.7 percent in April. The state has added nearly 42,000 jobs in the past year, a growth rate of 1.5 percent, compared with a U.S. growth rate of 1.7 percent during that period. `While hiring slowed in April, the overall trend remains positive, with all but one of the state's industrial sectors adding jobs over the past year," said DEED Commissioner Katie Clark Sieben. Manufacturers added 2,400 jobs in April, reaching a post -recession high of 315,000 jobs. Other sectors that added jobs in April were government (up 1,500) and information (up 200). Trade, transportation and utilities held steady. The following industries lost jobs: construction (down 2,200), professional and business services (down 2,200), leisure and hospitality (down 1,700), financial 1 activities (down 800), education and health services (down 700), other services (down 600), and logging and mining (down 100). Over the past year, sectors that gained jobs were education and health services (up 9,244), manufacturing (up 7,748), construction (up 7,158), trade, transportation and utilities (up 5,873), professional and business services (up 5,256), leisure and hospitality (up 4, 396), government (up 1,764), other services (up 1,161), information (up 427), and logging and mining (up 232). Financial activities (down 1,325) is the only sector that lost jobs in the past year. In the Metropolitan Statistical Areas, the following regions gained jobs in the past 12 months: Mankato MSA (up 3.1 percent), St. Cloud MSA (up 2.9 percent), Minneapolis -St. Paul MSA (up 1.6 percent), Duluth -Superior MSA (up 0.5 percent) and the Rochester MSA (up 0.3 percent). DEED is the state's principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and our services, visit us at http://mn.gov/deed/-. Follow us on Twitter at twitter.com/mndeed . Over The Year Employment Seasonally adjusted Not seasonally adjusted Unemployment Rate April 2014 March 2014 April 2014 April 2013 Minnesota 4.7 4.8 4.5 5.2 U.S. 6.3 6.7 5.9 7.1 Employment April 2014 March 2014 April '13- April '14 Level Chan e April '13- April '14 % Change Minnesota 2,807,800 2812000 41,934 1.5 U.S. 138,252,000 137,964,000 2,377,000 1.7 Over The Year Employment Growth By Industry Sector NSA OTY Job Change CITY Growth Rate (%) OTY U.S. Growth Rate Total Non -Farm Employment 41,934 1.5 1.7 Logging and Mining 232 3.5 5.7 Construction 7,158 8.0 3.5 Manufacturing 7,748 2.5 0.9 Trade, Trans. and Utilities 5,873 1.2 2.1 Information 427 0.8 -1.3 Financial Activities -1,325 -0.7 0.1 Prof. and Bus. Services 5,256 1.5 3.6 Ed. and Health Services 9,244 1.9 1.6 z Leisure and Hospitality 4,396 1.8 2.8 Other Services 1,161 1.0 1.0 Government 1,764 0.4 0.0 -30- Upon request, the information in this news release can be made available in alternative formats for people with disabilities by contacting the DEED Communications Office at 651-259-7161. Minnesota Department of Employment and Economic Development Communications Office Phone 651-398-9459 ort-800-657-3858•TTY 1-800-657-3973 www.PositivelyMinnesota.com An equal opportunity employer and service provider. • S�Questions? V Contact Us Department of Employment and Economic Development STAY CONNECTED: M© W © SHARE SUBSCRIBER SERVICES: Manage Preferences I Unsubscribe I Help This email was sent to dolson@ci.lakeville.mn.us using GovDelivery, on behalf of: Minnesota Department of Employment and Economic Development 332 Minnesota Street Suite E-200 Saint Paul, MN 55101 (800) 657-3858 ] �.�•-, L, OTY OTY Employment Employment Change Change Metropolitan Statistical Area #, NSA %, NSA Minneapolis -St. Paul MN -WI MSA 28,735 1.6 Duluth -Superior MN -WI MSA 706 0.5 Rochester MSA 288 0.3 St. Cloud MSA 2,906 2.9 Mankato MSA 1,671 3.1 -30- Upon request, the information in this news release can be made available in alternative formats for people with disabilities by contacting the DEED Communications Office at 651-259-7161. Minnesota Department of Employment and Economic Development Communications Office Phone 651-398-9459 ort-800-657-3858•TTY 1-800-657-3973 www.PositivelyMinnesota.com An equal opportunity employer and service provider. • S�Questions? V Contact Us Department of Employment and Economic Development STAY CONNECTED: M© W © SHARE SUBSCRIBER SERVICES: Manage Preferences I Unsubscribe I Help This email was sent to dolson@ci.lakeville.mn.us using GovDelivery, on behalf of: Minnesota Department of Employment and Economic Development 332 Minnesota Street Suite E-200 Saint Paul, MN 55101 (800) 657-3858 ] �.�•-, L, In the Twin Cities, industrial real estate is a hot commodity Janet Moore, Star Tribune A bold sign that the economy has rebounded is evident in the Twin Cities' industrial real estate market. Two recent reports by the real estate firms Colliers International and Jones Lang LaSalle indicate that many companies in need of more manufacturing or distribution space for expansion purposes may find it a tad challenging to find buildings locally to suit their needs. Challenging, but not impossible. Developers are responding in force with build -to -suit projects for specific clients, renovation of existing sites, or even constructing speculative buildings with no immediate tenants — the ultimate bet that the economy will improve. "We're making gains in the economy," said Steven Nilsson, vice president/brokerage for Colliers International's Twin Cities office. "Companies are at a point where they're saying, 'We need to add on or find a bigger home.'" Case in point: Last week, Nilsson closed on the sale of two sites totaling 15 acres in Brooklyn Park to First Industrial Realty Trust, a Chicago -based real estate investment trust. Two buildings totaling 240,000 square feet are planned for the property — which includes a long -shuttered Knox Lumber building that will be demolished to make way for the new construction. The price for two properties was $2.6 million, according to Hennepin County property records. This isn't First Industrial's first foray in the Twin Cities — the firm recently bought the Centerpoint building in Woodbury for $13.4 million. The economy and the lack of inventory are spurring the uptick in activity. According to the Jones Lang LaSalle report, industrial employment is expected to rebound in the spring and summer months, particularly in the construction sector. The Federal Reserve Bank of Minneapolis recently reported that Minnesota construction and land dev! elopment loans increased by 6.8 percent in 2013 to nearly $2 billion, "illustrating increased construction activity locally." And, while manufacturing exports statewide fell 0.5 percent in 2013, they grew by 7 percent in the fourth quarter. "I think a lot of what's driving [demand for industrial space] is that the existing stock of buildings is pretty thin," said Chris Hickok, executive vice president at Jones Lang La- Salle's Twin Cities office. "Companies that can't find existing building are being forced to look at new construction." In the first quarter, there was 527,103 square feet of absorption in the industrial market — the rate at which available space in the marketplace is leased, according to Colliers. This appears to be the case for all building categories within the industrial sector, including bulk warehouse and office showroom properties and office warehouse space. The overall vacancy rate decreased from 9.9 percent at the end of 2013 to 8.7 percent at the end of the first quarter. Several firms are adding space to the market by building speculative projects. Nilsson estimates that there could be anywhere from six to 12 spec industrial buildings constructed this year alone. Minnetonka -based Opus Development Co. recently completed a 200,000 -square -foot spec building at the Valley Park Business Center in Shakopee. United Properties has a 140,800 -square -foot office/warehouse property in Chanhassen. And Liberty Property Trust Inc. leased bulk warehouse property it started on a spec basis in Rogers to Graco Inc., which makes pump and spray equipment. As always in real estate, demand for industrial space depends heavily on its location. Nilsson says access to the Twin Cities' freeways and labor force is crucial. It helps if there's public transit in the vicinity of the facility, as well as proximity to courier services, since companies *! *want to compress the time it takes when the product goes from warehouse to end user," he said. The JLL report indicates that there's a competitive environment for tenants vying for large blocks of modern industrial space within the Interstate 494-694 loop. Not surprisingly, astute landlords with sought-after products are proving to be "increasingly nimble and selective when securing tenants," the report says. Colliers says functional, well -located properties are the most -coveted, but properties with some "functional obsolescence" in good locations can still be desirable for prospective tenants. And, "newer, functional properties can still meet with challenges if they have a less -than -desirable location." One of the more -interesting projects locally is the overhaul of an aging warehouse building — the former Smurfit -Stone Container Corp. site in Roseville owned by IRET Properties of Minot, N.D. The structure is being rebuilt to reflect modern sensibilities and demand, said Todd Hanson, senior director of Cushman & Wakefield/NorthMarq, which is marketing the property. "It's pretty unique, I'm not sure anyone has done what they're doing, which is an urban - style redevelopment in a suburban location," Hanson said. A portion of the older building will remain for an existing tenant, Hood Packaging, which also will assume some space in the new 220,000 -square -foot building. The overhaul is expected to be completed by next fall, and Hanson is actively looking for prospective tenants. "The industrial world has so little developable land, this project takes advantage of its location within the 694 and 494 loop, which is hard to find," Hanson said. Beyond construction of new buildings, out-of-town players in real estate also have been active in the Twin Cities market by purchasing existing properties. An affiliate of J.P. M! organ In vestment Inc., for example, purchased three warehouse properties in the southwest suburban market from DCT Industrial Trust of Denver earlier this year. The buildings, located in Savage and Shakopee, total 470,000 square feet and sold for $32.5 million. "The question is how long will this run last and will the market get overbuilt," said JLL's Hickok. "I haven't seen this much planned new construction in a long time, and I've been in the business for 27 years." Janet Moore • 612-673-7752 Olson, David From: Keith Ulstad <keith.ulstad@uproperties.com> Sent: Wednesday, May 07, 2014 11:39 AM To: Olson, David Subject: Rainbow sales/closures Supervalu, Lunds buying 18 Rainbow stores in Minnesota WLI: 4390MM" Enlarge Photo Sam Black I MSPBJ The Rainbow Foods in St. Louis Park will be converted into a Cub Foods store under a deal announced Tuesday. Nick Halter and Sam Black Minneapolis / St. Paul Business Journal Roundy's Inc. is getting out of the Twin Cities market, announcing the sale Wednesday of 18 Rainbow Foods stores in the Twin Cities to local grocers Lund Food Holdings, Supervalu Inc. and three other independent retailers. The companies are paying $65 million for the stores and their inventory. They say they'll turn 10 stores into Cub Foods, two stores into Byerly's and keep the Rainbow Foods name on six. The seller, Milwaukee -based Roundy's, said in a press release that it will exit the Twin Cities entirely by selling or closing the nine Twin Cities Rainbow Foods stores that aren't part of this deal. Roundy's has slowly been closing stores in the market for a few years while focusing on Chicago. The deal is expected to be finalized in the next 60 to 90 days. These 10 Rainbow Foods stores will be converted to Cub Foods stores: • Chaska — 200 Pioneer Trail • Eagan -- 1276 Town Centre Drive • Lakeville — 17756 Kenwood Trail • Minneapolis (Lagoon) — 1104 Lagoon Avenue • Minneapolis (Quarry) — 1540 New Brighton Road • Oakdale — 7053 10th St. N. • Plymouth — 10200 Sixth Ave. N. • Roseville (includes stand-alone liquor store) — 1201 Larpenteur Ave. • St. Louis Park (includes stand-alone liquor store) — 5370 16th St. W. • St. Paul — 892 Arcade St. These two Rainbow stores will become Byerly's (a Lund Food Holdings brand): • Eden Prairie — 970 Prairie Center Drive • Woodbury (includes stand-alone liquor store) — 7050 Valley Creek Plaza These six will remain Rainbow Foods under their new owners: • Maplewood — 2501 White Bear Ave. • Minneapolis (Lake Street) — 2919 26th Ave. S. • Plymouth (Plymouth Station) — 16705 County Road 24 • Richfield — 140 W. 66th St. • St. Paul (Midway) — 1566 University Ave. W. • West St. Paul — 1660 Robert St. S. These nine Rainbow Foods stores are not part of the sale. Roundy's will close them if no buyers come forward: • Bloomington — 2600 American Boulevard W. • Shoreview — 441 Highway 96 • Blaine — 551 87th Lane N.E. • Maple Grove — 16401 County Road 30 • Inver Grove Heights — 9015 Broderick Boulevard • Coon Rapids — 3340 124th Ave. • Savage — 14100 Highway 13 S. • Apple Valley — 15125 Cedar Ave. • Cottage Grove —7280 E. Point Douglas Road Jerry's Enterprises, Haug Enterprises and Radermacher Enterprises were also among the group of buyers. Those three independent retailers are all Cub Foods franchisees that are minority or majority owners of Cub stores. Supervalu is paying $35 million of the $65 million price tag. It's not clear how the other $30 million is divided up. Supervalu spokesman Jeff Swanson did not specify which companies will own or operate which stores. 0 The deal will bring the Cub Foods store count to 77, with all but one in Minnesota. Supervalu, of Eden Prairie, said it expects to make 1,000 job offers. Rainbow stores becoming Cub Foods will close for a up to two days before reopening, Swanson said. "We're very excited about today's news, both for Cub Foods and the four independent retailers. It's very good for everyone in the Twin Cities," Swanson said. Supervalu declined to say if it's considering buying any more Rainbow stores or what the long-term plan is for the stores that will keep the Rainbow Foods name. Edina -based Lunds said all employees at its Rainbow stores will have a chance to continue their employment. Lunds will extensively remodel the Woodbury and Eden Prairie locations. "We're committed to growth and development for the benefit of our team and customers in the communities we'll be serving," said Tres Lund, president and CEO of Lunds. "We're deeply excited to have the opportunity to bring our brand of quality, service and expertise to these communities." Lund Food Holdings operates 12 Lunds, 11 Byerly's and one Lunds & Byerlys Kitchen in the Twin Cities. A new Lunds opens in downtown St. Paul May 15.