Case Study
the evolution of a new business center

 

the evolution of a new business center

The recently completed Highview 610 Business Center, developed by Endeavor Development, is a testament to today’s strong demand for industrial space. In fact, demand was so high that several companies were turned away due to limited space. The building was fully leased prior to completion – not an uncommon occurrence in the Twin Cities; however, it was a long process to get to a fully leased building with many challenges along the way.

John Young and Fred Hedberg have been providing real estate advisory and transaction management services to Liberty Diversified International (LDI) and affiliated entities for over two decades. They leased excess space, sold buildings, and advised LDI on out-of-state real estate matters. In December of 2016, LDI engaged John and Fred to sell a 5.5-acre parcel of excess land in the northwest quadrant of Highways 610 and 169. This was always viewed as a great location, but demand had not yet pushed its way to the site. Not long after the land was listed “for sale”, a self-storage building developer made an offer, and a deal was struck.  Shortly thereafter, the City of Brooklyn Park imposed a one-year moratorium on new development in the area in order to study zoning and future use of land sites. After the moratorium ended, the revised zoning code no longer allowed for self-storage facilities because the city felt strongly about reserving that area for job creating businesses and the self-storage purchase agreement was terminated.

In July of 2018, John and Fred resumed marketing the property to both end-users and developers. In 2019 industrial development activity increased dramatically, and multiple developers engaged in discussions about acquiring the property for a new industrial building. One of those developers, Josh Budish, who had just founded Endeavor Development, became increasingly interested in developing the site with a 75,000 square foot industrial building that catered to a smaller-tenant niche. John and Fred received multiple offers for the site, but the decision was made to proceed with Mr. Budish, who was looking for a project for his new company.

Mr. Budish entered into a purchase agreement for the land, but several unexpected development issues caused a large increase in costs and he was forced to cancel the purchase agreement. Simultaneously, the Covid-19 pandemic was getting more serious, which caused developers to back out of development projects across the country due to the uncertainty about the severity of the economic fallout that would ensue. Contrary to many predictions, demand for industrial space increased shortly after the first government shutdown, giving developers confidence to proceed with speculative industrial developments. Fred and John renegotiated the purchase agreement with Mr. Budish and the property was sold to Endeavor in December of 2020.

Mr. Budish hired Fred and John, along with their colleague, Joe Schultz, to lease the new building. All parties involved believed that demand was strong for buildings of this size and leasing activity would be strong. Several companies soon became interested in the project and were eager to move in quickly. Fortunately, Endeavor fast-tracked the construction process and after only six months, three new tenants signed lease agreements that filled up the entire building.  The multi-year process of selling vacant land and developing a speculative industrial building culminated in three businesses having a modern new building to accommodate their growth plans.

John Young

Written By:

john young, ccim

Vice President | Real Estate Advisory

952-854-5067

John.Young@ForteREP.com

 

 

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