Keystone Community Services Purchases Building
St. Paul will have a new food shelf specifically designed to meet the needs of local residents. John Young, Vice President with Paramount Real Estate, along with a team including NTH and Fox Advancement, represented Keystone Community Services in purchasing a building on University Avenue for their new community food site. This 20,000 square foot facility will be located just steps from the Green Line’s Fairview Avenue Station. In addition to public transit, Keystone’s participants and volunteers will have access to both off and on-street parking, which is rare along the Green Line.
Keystone’s mission is to “strengthen the capacity of individuals and families to improve their quality of life”. They are an 80+-year-old large multi-service nonprofit organization that provides human services in the areas of basic needs, afterschool programs, youth employment programs, and senior services. Food insecurity is at an all-time high due to the slower economy and Covid-19 impacts. Keystone is filling these needs with existing and new food programs for residents of Ramsey County. Therefore, the new site will provide expanded resources for our community. A capital campaign is underway to raise money for renovating and equipping the site. Learn more at www.keystoneservices.org.
Keystone Community Services Purchases Building
COST SAVINGS WITH LED LIGHTING
DID YOU KNOW?
LED lighting is up to 80% more efficient than traditional lighting such as fluorescent and incandescent lights? 95% of the energy in LEDs is converted into light and only 5% is wasted as heat. Compared that to fluorescent lights which convert 95% of energy to heat and only 5% into light! LED lights also draw much less power than traditional lighting; a typical 84-watt fluorescent can be replaced by a 36-watt LED to give the same level of light. Less energy use reduces the demand from power plants and decreases greenhouse gas emissions. See photo on the right for a side by side comparison.
CODES & CITY REQUIREMENTS
It is important to know the exterior lighting codes and requirements in your city. Cities that realize the importance of this simple step to energy savings are being proactive by outlining specifics on what can be used. Color and output/brightness are two of the biggest factors.
City of Bloomington Requirements: https://www.bloomingtonmn.gov/sites/default/files/52u_exterior_light.pdf
CONSIDER ALL THE FACTORS
Do we need to replace the entire fixture or just the “bulb”? There are many companies out there that will provide you with a free lighting audit showing you the big savings of re-lamping fixtures and all. Make sure you are considering ALL the factors:
Do we have the correct existing fixtures/watts?
Are the usage hours correct/close to your actual facilities hours?
Can you retrofit your current fixtures?
Plug and Play Ballasted LED – swaps out existing linear fluorescent T8 or T5 LED tubes.
Direct Wire LED Tubes– no ballast maintenance needed.
Plug and Play Ballast Bypass – Upgrade by simply changing out the lamp. No electrician cost for the rewiring of the fixture. No voltage issues at the socket, and reduced overall maintenance.
There’s a lot to consider before changing out lighting. Make sure you spend the time finding the right fit for your facility. Some cities may require consumers to re-lamp outdoor fixtures to LED over the next few years. To the contrary, it may be surprising to hear that some cities, Excelsior, for example, prohibits them. With the reduction in energy it seems irresponsible not to consider moving to LED.
For More Information About
Property Management, Contact:
Lisa Borene | Vice President
Property Management Division
Paramount Real Estate Corp Partners with
TCN Worldwide Real Estate Services
Paramount is proud to continue our partnership with TCN Worldwide Real Estate Services for the 12th year. TCN Worldwide is an alliance of top independent brokerage firms serving more than 200 markets. Work with a global leader while accessing the unique knowledge that only local offices can provide.
TCN Worldwide, a consortium of independent commercial real estate firms, provides complete integrated real estate solutions locally and internationally. An extensive range of real estate services coupled with a personal commitment to exceed expectations is what allows TCN Worldwide to be a leader in this competitive industry. Comprised of leading independent brokerage firms, serving more than 200 markets globally. TCN Worldwide combines an entrepreneurial approach with years of local experience. Around the globe, across all property types and service groups, TCN Worldwide’s more than 1,500 brokers and salespeople have a well-earned reputation for providing straightforward expert advice.
Let TCN Worldwide Work For You… TCN Worldwide affiliates are able to meet their clients’ real estate needs globally by utilizing local expertise while retaining direct control and responsibility, providing a single point of contact. We offer comprehensive commercial real estate transaction, management and consulting services, all provided with the highest level of corporate accountability and entrepreneurial commitment.
TCN Worldwide allows you to communicate directly with a business owner and entrepreneur. We offer more than sound real estate advice. We offer a partner to share your vision. When you work with TCN Worldwide you’ll be working with someone who shares your sense of ownership and accountability.
Ranked among Most Powerful Brokerage Firms – Commercial Property Executive
A Best of The Best: Brokerage Firm – National Real Estate Investor
One of the Industry’s Most Recognizable Brands – The Lipsey Co., Top 25 CRE Brands Survey
EXPECTATIONS YOU SHOULD HAVE WHEN
HIRING A REAL ESTATE BROKER
When a firm engages the services of a licensed real estate broker, what should be the expectation in terms of service and performance? There are many areas to note, but I will mention three that I believe are most important.
Enthusiasm and hard work can make up for many deficiencies. There is no question that those two qualities are critical to any successful real estate assignment. However, people just beginning their careers in the brokerage business don’t start by tackling the most difficult deals. Standard practice in the industry is for a young person to be partnered with, and mentored by, a more seasoned veteran. There is much at stake in any real estate deal. Understanding how to structure the proper deal, familiarity with existing market conditions, editing lease language, and negotiating with area landlords generally is earned by riding the coat tails of a more experienced broker and on-the-job experience. Most of what I have learned over the years has come through time spent with experienced and competent landlords, attorneys and contractors . . . and making plenty of mistakes!!!
Absolutely essential! When any firm, large or small, places its trust in an individual broker, particularly with what’s at stake in a real estate deal, the broker must present an “open book” of himself and the deals he presents to the client. If a landlord is offering a special broker trip or bonus for concluding a deal, the client needs to know. If the broker represents a building they are recommending to the client, the client needs to know. A perceived conflict is sometimes worse than an actual conflict. In every instance, without exception, the broker must do what is best for the client. There should be total transparency from start to finish.
The broker must provide value in every step of the process. If there is no value, what benefit is there to the client? Value comes in many forms and weighted differently by various firms. However, successful firms are focused firms, and taking the time required to complete a real estate deal can easily eat up lots of time . . . and money!!! Expecting a full-time employee with no experience or knowledge to represent the firm’s best interests in the marketplace is foolish. Landlords know their business, and you know yours; and someone needs to be an advocate for the client.
Looking For A Great Real Estate Broker? Look No Further!!!
Fred Hedberg, CCIM, SIOR, Principal
Phil Simonet, Principal
John Young, CCIM, Vice President
Joseph Schultz, Associate
Jack Buttenhoff, Associate
Nancy Powell, Vice President
Check us out on Social Media
THE ECONOMIC OUTLOOK FOR CRE INVESTMENTS WITH DR. MARK DOTZOUR
We are proud to present this special TCN Worldwide webinar featuring Dr. Mark Dotzour. He is a frequent participant at TCN conferences and one of the truly ‘entertaining economists’ to provide an economic outlook and forecast for TCN members as well as their clients, prospects, friends, and family.
Join TCN Worldwide and Dr. Mark Dotzour as he discusses:
The outlook for job growth in the US.
Will the recovery be quick or prolonged?
What is the outlook for inflation in 2021 and beyond?
The outlook for borrowing rates
What is the outlook for cap rates?
What is the outlook for investor demand for US commercial real estate?
SPECIAL GUEST SPEAKER:
Dr. Mark G. Dotzour (CRE Economist)
Former Chief Economist and Director of Research at Texas A & M University
Dr. Mark G. Dotzour is a real estate economist who served for 18 years as Chief Economist of the Real Estate Center at Texas A&M University in College Station. He has given more than 1,450 presentations to more than 250,000 people. He has written over 90 articles for magazines and journals.
Dr. Dotzour makes complex economic issues easily understandable. Above all, Mark’s goal is to provide his audience with a “tool kit” of useful information that will help them make good business decisions. Ultimately, helping their families, their clients, and their company.
His research findings have appeared in the Wall Street Journal, USA Today, Money Magazine and Business Week. Similarly, his clients include banks, private equity firms, real estate investment trusts, construction firms, engineering companies, wealth managers, private foundations, and commercial and residential brokerage firms. In addition, he has made presentations to local and national trade associations all over America.
Special thanks to TCN Worldwide for hosting this webinar.
Questions? Call Paramount Real Estate Corporation.
FOCUS ON WHAT’S IMPORTANT
Companies searching for new office or industrial space in today’s soft office market, or conversely today’s healthy industrial market and listing brokers and landlords are guilty of this as well… They often tend to focus almost exclusively on rental rate. In other words, the lowest price should be enough to positively influence a tenant’s decision to lease space in a building. The result? We’re “commoditizing” commercial space alternatives while losing the focus on what is right and best for the tenant.
SPACE ISSUES BEYOND PRICE
Let me be the first to say that economics are always important and competing buildings must be reasonably similar. However, economics are not the most important element when it comes to making a real estate decision. I have often told clients, “What difference does it make if the landlord provides the space at no cost, if the space is not functional and does not effectively work for you?” Retail clients generally seem to have a better handle on weighing the intangibles when they make space decisions. They understand that there are issues far more important than price. Issues such as exposure, vehicle traffic counts, ease of access, parking and neighboring tenants. Issues that will impact their long‐term success more than a marginal reduction in their base rental rate.
TOTAL COST SOLUTION
So many components go into a good real estate decision, and price is only one of those components. Tenants need to look at a “total cost solution” rather than just a “rental rate” solution. The latter is the proverbial tail wagging the dog kind of decision, and decisions like that never work well over the long term. That’s why establishing a preliminary budget is critical to the process. So that companies don’t waste time looking at what they can’t afford. Companies often do themselves a disservice by discounting the importance that a well thought out facilities plan plays in their long‐term success. Space, like any other component of a firm’s business plan, should function strategically. Ultimately, ensuring long‐term success for the firm. The list of items that ensure long‐term success generally relegates price to the lower tier of importance.
RANKING CRITICAL ISSUES
Companies must address, evaluate and rank the importance of critical issues. These may include parking availability, access, visibility, building efficiency, flexibility to expand and contract, on‐site or close‐by amenities, public transportation availability, security, sustainability issues, building management, landlord financial viability ‐‐‐ and, obviously, the financial structure. Whether internally generated or broker generated, tenants must understand the total cost of the deal. One deal may provide more dollars for tenant improvements; another deal may offer less tenant improvement dollars but more free rent. Yet another may offer to graduate or step the rent and pay moving costs. And in the end, a simple consideration like ease of client access or proximity to public transportation may trump the lower base rent deal.
Guard against making an impulsive, “head in the sand” facility evaluation. Select a member of your team and a competent real estate broker who will ensure that your firm makes a well thought out space decision, not a decision based on a single issue like rental rate. Make sure you have completed the proper due diligence before signing on the bottom line!
NEED HELP FINDING THE RIGHT SPACE?
Reach out to one of our
TRUSTED. DEDICATED. EXPERIENCED.
brokers at Paramount Real Estate Corporation:
Industrial: Fred Hedberg, CCIM, SIOR, Principal
Phil Simonet, Principal
John Young, CCIM, Vice President
Joseph Schultz, Associate
Jack Buttenhoff, Associate
Office: Nancy Powell, Vice President
LEASE VS. OWN
Many business owners dream of owning their own industrial or office building rather than lease space and pay rent to a third party landlord.
One should consider both the costs and benefits of commercial property ownership to understand if it’s the right financial and operational move for the individual owner (what ever form of ownership it may be) and the company occupying all or part of the property.
Potential Benefits of Ownership:
Better control of building operating expenses
Potential property value appreciation creating more personal wealth
Principal reduction on the loan via rent payments from the tenant
Tax benefits such as depreciation
An excellent marketing tool (the bldg.) demonstrating the success of an organization
May be less expensive than leasing space in today’s market
Potential Costs and Risks of Ownership:
Generally less flexibility to expand or contract space size
Requires equity up front: 10%-25% down payment
Responsible for ALL building maintenance (roofs, parking lot, HVAC, etc.)
Could lose value during a market downturn
A default on the loan may result in foreclosure by the lender
If you are interested in a more thorough review and recommendation on Own vs Lease feel free to call Paramount Real Estate Corporation. We have decades of experience leasing, acquiring and disposing of commercial real estate properties.
Written By: Phil Simonet, Principal | Paramount Real Estate Corp | TCN Worldwide
Our Newest Tenant at RMC Corporate Center
RMC Corporate Center welcomes its newest tenant Welsh Construction. Welsh Construction secured the beautiful endcap space in this Minnetonka building. After removal of the acoustical grid and tile ceilings, the tenant was able to take advantage of the heavily glassed space. The newly built office configuration shows that desirable space can come from older building stock, providing the property is as relevant today as it was back in the early 1980’s when constructed. Quality construction never goes out of style!
Tenants at RMC Corporate Center are poised to take advantage of SWLRT with a small station directly across Bren Road East. The new station and many other amenities are within walking distance. With 14’-0” clear heights, good parking ratios, excellent park amenities, including walking trails and green space, the property is a great option for a wide range of space users. In addition, super easy access and exiting due to the change in some one-ways make this property desirable for any business.
Thanks to Brad Bohlman of Colliers for his assistance on this lease.
For more information about Welsh Construction visit their website at: https://www.welshconstruct.com
Don’t miss out on our current space options at RMC Corporate Center:
-2,814 SF office-warehouse; with drive-in door
-4,000 SF office-warehouse; with 2 dock doors
-5,000 SF all office
Written by: Nancy Powell | Vice President
TRUSTING HEART BLOOD CENTER
Paramount Welcomes Our Newest Tenant to 7390 France Building
Trusting Heart Blood Center recently opened their first location! They are our newest tenant at 7390 France Ave S, Edina. This is the company’s first blood center and they have plans to open more centers throughout the US. At the new center, Trusting Heart collects blood platelets from volunteers and supply these platelets to local area hospitals. The hospitals desperately need them to save lives. In addition, they pay volunteers for each visit.
For many years, Paramount Real Estate Corporation has managed and leased 7390 France Ave S. Approaching it’s 50th anniversary, the building was in need of updating. That updating included gutting and rebuilding the entire interior of the building. This was done to Trusting Heart’s design and specifications. Therefore, the installation of new mechanical and electrical systems was imperative. This included a new energy management system, LED lighting and a backup generator. Expanding the main entry to the building created a more modern look. The contractor removed the traditional dropped ceilings in areas of the building. As a result, the space is now open to the concrete deck, which was painted black.
The architect created a bright open reception area and adjacent canteen. They did that so Trusting Heart can provide a welcoming atmosphere to its visitors. Each patient donation area is semi-private with comfortable seating and a TV. In addition, fresh paint, landscaping and the installation of window awnings spruced up the exterior of the building. Also, a new illuminated monument sign was installed right in front of the building.
PARAMOUNT MANAGES CONSTRUCTION PROJECT
Lisa Borene, Vice President of Property Management at Paramount served as the owner’s construction manager for the project. She worked closely with the contractor Gardner Buildings to assure that all work was completed on a timely basis.
For more information on Trusting Heart Blood Center and to donate, go to www.trustingheartbloodcenter.com
Thanks to Eric Sheaffer & Matt Friday of CBRE for their assistance on this lease.
Written and Leased By: Fred Hedberg, CCIM, SIOR | Principal
A CONVERSATION ABOUT CONSTRUCTION COSTS
Construction costs are going down due to the slower economy: True or False? Our clients are asking us this question. So we asked an expert, Jamey Flannery, Owner of Flannery Construction, to help us with an answer. Flannery Construction is a mid-sized, woman-owned construction company that works all over the metro area. They do ground-up construction of multi-family, industrial, and office. They also do tenant build-outs. Look for their signature building on I-94 just east of Allianz Field.
Q: Are construction costs going down?
A: I will say that as much as we would like it to be true, there is a lot of upward pressure on construction costs. We are seeing huge increases on lumber. That seems to have leveled off recently and even declined a little bit. However, we were up almost 100% from pre-COVID levels. We are seeing cost increases in PVC and a few other materials. That has putting a lot of pressure on contractors. While we are slower than we anticipated this year, we’re still fighting against really long lead times for materials. We’re also fighting against cost increases for materials. So the answer is “NO” construction costs have not declined.
Q: Is now the time for businesses to do that $1 million construction project they have been considering?
A: I think they should do the $1,000,000 construction project that they are planning to do. I think the only reason that the prices aren’t higher, is because contractors are absorbing cost increases.
Q: Is this in the form of reductions in fees and/or general conditions or just lower profits overall?
A: We are see lower profit margins overall.
Q: How are you doing with your supply of labor and is COVID affecting availability of labor?
A: COVID is keeping labor prices stable and we are seeing a lot of inquiries for jobs in the trades. We’re seeing a lot of hungry subcontractors right now and good pricing. They are essentially absorbing some of these cost increases. However, we’re also seeing a few subs that have a crew or two who are down with COVID, so planned work isn’t exactly staying on schedule.
Q: Are wages for labor increasing too or is that staying pretty much stable?
A: We are a union shop so we will have a labor increase in May, but I think that, generally speaking, wages are going down and it’s favoring the employer right now.
Q: If you had to give some advice to people who are looking at a construction project, what delivery method would you say is the best way for them to go about it?
A: It is entirely up to the owner, but what I think is the best delivery method is negotiated or design build. The reason for that is, if every team member really has a firm understanding of the intent behind the project, we’re going to make better decisions. If the contractor really understands the project well up front, they’re going to help the owner make very informed decisions. With the delays and with the cost increases, we are having to build our contracts a little bit differently. We might have to submit a letter of intent to some of our subcontractors before we sign a contract because of the long lead times.
Q: Do you have any recent examples of the long lead times?
A: We had a conversation with a subcontractor supplier today where we need Hardie plank siding panel delivered on January 7th. If we had placed that order one day later, we would be looking at a 30% cost increase to receive an order on a specific date. That is true through April because they are so backlogged. So, working with your contractor to understand what’s happening in the marketplace and what conversations need to happen before the contract is signed is important. That really does emphasize the need to have a general contractor partner with a negotiated project.
Q: Some of our clients get concerned that without a full-on multiple bid process, they won’t get the lowest price. What do you think about that?
A: There has been a fair amount of research on delivery methods and while the hard bid may have an initial lower cost, the total cost can creep up pretty quickly because of change orders. Having that group and team understanding of the project, leaves less room for change orders when we are delivering a turnkey project. In a hard bid scenario, if there is a mistake on the plans or an omission or an assumption, then we’re going to assume the lower number because we want the project. I’ve seen it many times where the hard bid is low and then the change orders start because there wasn’t complete understanding of the total project.
Q: What is hot right now in the marketplace in terms of construction projects?
A: Multifamily is still running hot. There’s still a hot market in Saint Paul, Minneapolis and in the surrounding suburbs. We’re not seeing very much in retail. We’re not seeing very much in hospitality right now, which understandably so. Industrial is a hot market as well.
Q: How are you seeing the approval processes in cities now that many of the city’s employees are working from home?
A: It is excruciating. It is taking longer now. This is an anecdote in the City of Minneapolis. While they are being as responsive as they can be while working from home, the process to upload plans is one page at a time. Everything is just taking longer because there’s not a lot of collaboration so the person who’s reviewing can say to the person next to them “hey, what do you do in this situation”? So there is less collaboration, and everyone is just a little burnt out.
Q: What’s your prediction for the future?
A: I am an optimist. I think that we were due for a market correction anyway. Unfortunately, it really is hitting a lot of people hard, and I’m not minimizing that on any level. I do think that this correction is taking place of a market downturn that had been anticipated for 2021. When there’s a widely available vaccine and it’s in place for at least a little bit, I think that we’re going to come back pretty strong. I look at Architectural Billings as my leading indicator. Contractors follow about six months to a year behind architects. They have been down since March, April, and May. The only positive indicator that they have is that new inquiries are up significantly as of September and October. Money is cheap right now and I think that we are going to come back strong. So, we’ll have a strong second half of 2021 going into 2022. I am looking at shoring up my project management staff so that we can be ready to take on the increased workload that I am anticipating.
Q: Thank you Jamie and where can our clients get in touch with you?
A: Thank you, John they can find us at Flanneryconstruction.com or stop in our building on I-94 by Allianz Field.
1375 St Anthony Ave | Saint Paul, MN 55104
Written By: John Young, CCIM | Vice President