12 Key Takeaways from Three-Part Panel on Midway Projects, Developing for Twin Cities Future
With ongoing construction on seemingly every corner of the Twin Cities metro area, an event was aptly held Wednesday in which key people from the local real estate scene offered insight into current developments and the overall changing Twin Cities landscape.
Hosted by digital media event company Bisnow Media in Washington Square in downtown Minneapolis, the event featured three panels: one on Allianz Stadium and the Midway project, one on hospitality projects, and one on mixed-use developments.
Throughout the morning, panelists touched on an array of topics, including project updates and industry forecasts. Below are the top takeaways from each panel:
Panel 1. Peter Coyle, attorney at law firm Larkin Hoffman, speaks with Minnesota United FC owner Bill McGuire about the soon-to-be completed Allianz Field and plans for the surrounding Midway area.
The area around Allianz Field will be built west to east, with residential development in the west likely to be the next stage of construction. Once completed, Allianz Field will be the centerpiece of the 35-acre Midway super-block. About 120,000 square feet of residual retail space on the east side will be retained. Development will start on the Snelling Avenue side. Building heights will decrease eastward, according to Coyle.
The 2-million-square-foot will be sectioned for different uses. One million is for residential, up to 450,000 square feet is for business and 300,000 square feet is for retail. The remaining space is for a miscellaneous use such as a cinema or fitness center. However, McGuire said they may not actually do all of that, and an area may be set aside for green space. There will also be room for game festivities outside the stadium.
Allianz Field itself is being entirely funded with private money. McGuire stressed this because it’s contrary to what the public feared at the onset of the project, which he does note is still a public-private partnership. The stadium’s current cost is “well over $200 million.”
It’s intended that Allianz Field will be used for more than Minnesota United games. Other sports events are already planned, and McGuire said they’re interested in non-sports programming, but face a challenge with a field made of real grass.
Panel 2. Matthew Hazelton, first vice president of investments at Marcus and Milichap, chats with Radisson Hotel Group vice president of development Dinesh Chandiramani, and Aimbridge Hospitality vice president Rich Sprecher about the hospitality industry and related development in the Twin Cities.
Hospitality industry leaders believe Minneapolis is a stable market ripe for further development. They expect occupancy rates to remain solid, and thus, see no argument against adding more hotels in the city.
Wage increases and technological advancement are key industry concerns. Labor costs is the highest expense for hotels, so as wages rise everywhere, Chandiramani and Sprecher say efficient operation is key in order to maintain a smaller work force. Chandiramani also points to increased automation of services. But Sprecher notes hotel owners must figure out how to incorporate new, useful technology without alienating the non-tech savvy demographic.
Airbnb’s increasing presence has not yet threatened hotels, particularly those in the Twin Cities. Hotels have absorbed the impact well, in part because they serve different customer bases. Also, Chandiramani says some markets have banned Airbnb because it spells tax losses for a city or municipality.
Hotel development cannot be driven by one-time events like the Super Bowl. It’s important to book events year-round. Rising niche events such as conventions for certain television shows or other sports (i.e. WrestleMania) are examples of alternative revenue-generators.
Panel 3. Newmark Knight Frank general manager Jen Helm leads a conversation on mixed-use development. On hand are Keith Ulstad, senior vice president at United Properties (developer of the North Loop “Gateway” project); Bob Lux, principal at Alatus (developer of Block E, Rice Creek Commons, the Berkman); Matthew Knisely, managing director, investment group – east at Shorenstein (developer of Washington Square); and Lee Krueger, president of St. Paul Port Authority (Treasure Island Center).
Mixed-use projects come in many different forms and it is typically difficult to devise a plan that satisfies all stakeholders. Often this results in forcing certain elements into a mixed-use plan. For example, retail tends to be a necessary evil – it’s not always great from an investor standpoint, but residents or municipalities demand its inclusion.
When developments need more money for completion, naming rights often serve as a prime revenue source. The Dayton’s project tapped into this, as did The Berkman.
Developers are catering to the growing “experience” trend – and expect it to stay. The challenge, Ulstad notes, is there’s a disconnect between older developers and the new customers for which they seek to create these retail and accommodation “experiences.”
Parking is a major issue facing real estate leaders today. Ulstad says the pendulum has swung from cities demanding more parking with building projects, to cities encouraging omitting the need for cars. Additionally, while parking is still needed now, the potential looms for parking lots to become obsolete with the advent of self-driving cars. Ulstad says it’s a “state of flux.”
Additionally, here are the 4 takeaway quotes from the event:
“We’re in a big state of change and a lot of friction in the development process, in trying to design for tomorrow things that work for today.” —Keith Ulstad on incorporating parking into building projects.
“To make it a community you have to have affordability… some in suburban cities don’t want affordable [options]… but [I think] you have to have it. If you don’t we’re doing the wrong thing.” —Bob Lux, on including affordable housing in mixed-use developments.
“Cities tend to paint with a roller, not with a brush. They say ‘we want mixed-use’ and often you get the feeling that means they don’t really know what they want.” —Ulstad.
“It was an emotional decision… We all stand around and say we want to be a great international community, but we don’t want to have the sport of the world? … It seemed like a logical and easy decision to step in and say let’s keep this here.” —Bill McGuire on why he joined the soccer stadium endeavor.