Investment Properties Strong in Local Real Estate Market
Commercial realty a bit slower than past, but still healthy
- By Tim Krohn firstname.lastname@example.org
- Jun 2, 2017
MANKATO — Commercial real estate agents are encouraged by continuing demand and growth locally but say things have slowed a bit from the heady market in recent years.
“I’m trying to put things together. It seems to be taking a little longer than previous years,” said Kyle Smith, of Tailwind Group, which focuses on office, retail and apartment development.
Commercial Realtor Tim Lidstrom said he senses a bit of a slowdown, too, after a few years of strong development both downtown and on the hilltops of Mankato and North Mankato.
“This year you don’t see as many backhoes digging as you did in years past, so hopefully that will increase.”
Still, both say Mankato’s steady growth and solid economy provide strong foundations for a good real estate market.
Realtor James Halbur, of Coldwell Banker Commercial, said the real estate market remains healthy and he sees a good future for the region.
“I look back to when River Hills Mall was built in early 1990s, and that’s not along ago, and how many corn fields there were by Madison Avenue then. Now there’s a lot happening south of the airport, by Eagle Lake and the east edge of Mankato. There are some great things happening and Mankato is still a hub and moving forward.”
Halbur said individuals or investor groups looking for commercial investment properties remains a strong market locally.
“Investment property is really good,” he said.
“People want to diversify their investments. If you have good tenants, commercial real estate is a really good investment.”
He said a good investment property can provide 7-9.5 percent annual returns. “Which is a lot better than you can expect in savings accounts and is comparable to stocks.”
The office rental market has been affected by the addition of a lot of top-grade “A” office space in recent years. That has depressed the price of “B” class office space as many businesses moved out of those spaces and into the better space. “What was leasing for $10 (per square foot annually) a few years ago is now $6.50,” Halbur said of the abundant “B” class offices now available.
“If you’re starting a business, right now is a good time to get office space.”
On the construction and renovation side of commercial and industrial properties, things are on pace with last year at this time, according to a recent update given to the City Council by City Manager Pat Hentges.
There was about $13 million worth of permits for new construction or remodeling of commercial or industrial buildings in Mankato.
“Commercial projects continue to infill existing lots, specifically around the Home Depot/Community Bank area, and smaller scale infill projects will occur along Madison Avenue as well as some re-purposing projects of vacant commercial space,” Hentges noted.
One of the bigger new construction projects is the 25,000-square-foot Medieval Metalwerx building, going up along Highway 14 on the east edge of Mankato, next to the Verizon call center building in the Eastwood Industrial Center. Halbur brokered the deal for the land. “They bought 2 acres of the 11-acre site. They will bring some good jobs. He’s excited to come to town and add some manufacturing jobs.”
The company, owned by Jesse Olson, has been in business more than 12 years at a location near Hutchinson and he wanted to expand and relocate.
The business makes and sells race car chassis, suspensions, shocks, springs, cooling systems and other items for track-racing enthusiasts.
The company plans to purchase $2 million in additional equipment and to hire at least eight new employees.