Pickup in flex property sales bodes well for 2018

Commercial real estate experts think a spate of flex and industrial property sales in recent days is proof that these markets will be as active this year as they were in 2017.

Four suburban deals totaling $57.23 million have closed since May 15 with local companies and out-of-state real estate investment trusts doing the buying.

The sales come out of marketing done in the first and second quarter, said Judd Welliver, a senior vice president specializing in office and industrial sales with the Minneapolis office of CBRE. Welliver’s team represented the sellers in all four of the deals.

The sales come after a slowdown in commercial real estate sales that Welliver said is normal for the time of year. Brokers for sellers spent the first part of 2018 marketing properties after closing out fourth-quarter deals at the start of the year.

“You don’t typically see a lot of closings early in the year,” Welliver said Wednesday. He anticipates the Twin Cities office and industrial markets this year will achieve roughly the same sales volume as in 2017.

Even so, sales in the flex office and warehouse category in the Twin Cities are ahead of the same period in 2017. Through the end of April, $124.2 million of the real estate type had sold, according to data from New York-based Real Capital Analytics. Sales in the first four months of 2017 were $77.1 million.

Water Street Partners, the buyer in one of the CBRE deals, made its first property purchase last week in Brooklyn Park. Former Excelsior Group executives Joe Boone and Jim Hegedus formed Water Street in September, as Finance & Commerce previously reported.

Hegedus said deals have taken extra time to get moving this year as sellers hold firm on pricing. Buyers are also taking their time, he said.

“On the buyer’s side, I think we’re all being a little bit pickier,” he said.

The properties that changed hands in the last 10 days or so are in suburban communities throughout the Twin Cities.

The year started with brisk flex space sales activity. St. Louis Park-based Eagle Ridge Partners and Maryland-based Artemis Real Estate Partners paid $70 million for a 12-building Twin Cities flex industrial portfolio in March. Minneapolis-based Capital Partners and New York-based Investcorp International paid nearly $51 million for an 11-building portfolio of in January.

Welliver said his team is presently working on about 30 deals.

Water Street will be one of the buyers in the market. The company plans to purchase four to six properties in the next 12 to 18 months, Hegedus said.

Welliver’s team at CBRE includes Ryan Watts, Sonja Dusil and Tom Holtz.


This article about Water Street Partners comes from Finance & Commerce.