Many of the commercial real estate projects proposed before the 2008 recession are finally taking shape along the 494 strip in Bloomington.
Developers, planners and businesses are watching closely to see if the end result of those projects proves fruitful, and what that will mean to the overall commercial real estate market in the Bloomington and greater Twin Cities area.
Much has changed since 2008. The need for bricks and mortar retail centers has dramatically changed with the prevalence of online purchasing and alternative delivery options. As a result, businesses continue to strive to find ways to do more with less - including less office space per employee, and in many cases with fewer employees overall.
As the pre-recession conceptual development projects now near completion, we will soon know whether the plans laid out by the City of Bloomington were forward-thinking enough in the near term. Was their vision, and the vision of the developers, the right one? Can the development meet the needs of today's market and that of the coming decades?
"Despite the continued development of the Bloomington area - and in some cases because of it - there are still many quality untapped opportunities for real estate along that corridor," said Keith Ulstad, senior vice president at United Properties. "What remains to be seen is how businesses, consumers and the community at large respond to the development and the additional capacity it creates."
Bloomington has seen new residential, mixed-use, office and hotel developments from the Normandale Lake area to Mall of America. Notably, United Properties' mixed-use retail and residential project at Penn and American is already in its second phase, while Mall of America has seen two adjacent hotels open: Radisson Blu and JW Marriott. Bloomington Central Station has also spurred nearby residential and hotel development.
Lagging a bit behind other product types is the office sector. While Mall of America's new office space hasn't been leased yet, there are clues that point to existing pent-up demand. In 2011, Best Buy converted its headquarters into a multi-tenant building that received immediate interest. Additionally, the City of Bloomington has identified the city-owned land at 700 West American Boulevard as the site of a future office or medical office building and is planning to issue a request for proposal to interested developers later this year.
"We are involved in more and more projects that seek to capitalize on the conventional wisdom that people want to live close to where they work, shop and play," said Anne Olson, a partner in Lindquist & Vennum's real estate practice. "So it's no surprise that we are seeing more mixed-use sites combining residential and commercial that feed into each other and promote a more thriving area."
That kind of flexibility wasn't as common in commercial real estate before the 2008 recession, but that's how quickly demand can evolve.
Technology can change aspects of the real estate landscape in less time than it takes to put up a new office building, and the Bloomington plans have been carefully laid over a long period of time. But that doesn't necessarily mean they're outdated.
"Trends that have driven growth in downtown areas have also benefited emerging urban neighborhoods like Bloomington's South Loop and Penn American Districts," said Glen Markegard, planning manager at the City of Bloomington. "We are excited by the many recent high quality projects, and we are optimistic that proximity to the airport, transit, employment and amenities will continue to attract development to these walkable urban neighborhoods."
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