The Twin Cities land market continues its comeback as developers take strategic land positions in sought-after markets. Market fundamentals continue improving across all categories, resulting in increasing transaction volume and rebounding values.
Driven by a recovering housing market, single-family residential is the hottest land sector as national homebuilders aggressively acquire raw land in first-, second- and now even some third-tier communities. Record-low apartment vacancy rates continue driving multi-family developers to compete for prime urban in-fill and select inner-ring suburban sites.
Build-to-suit and select speculative development are driving industrial land sales as developers stake out the next wave of inventory. Retail developers are chasing urban in-fill redevelopment sites, while the agricultural land market is stabilizing.
Single-family residential activity, including more acquisitions in tertiary markets, should continue as the housing market continues its recovery. First-tier residential markets are being redefined due to the lack of available prime land. Pricing for first-tier markets may be topping out while second-tier market values continue to rise.
There is a sense that the class A multi-family market is beginning to overheat and the land acquisition market for those properties could start cooling in 12-24 months.
More industrial developers will likely stake out land positions for build-to-suit and speculative projects. The industrial market could expand geographically within the next few years as developers look to markets like St. Michael, Afton and south of Shakopee for the next new industrial park.
Expect to see the best retail in-fill sites continue to be redeveloped to a higher and better use; however, a number of older, ill-conceived retail pad sites may need to be redesigned or the use changed before major development will occur.
To read more, visit the July 2013 edition of Cushman & Wakefield/NorthMarq’s Compass report, now available online. Visit the web site: www.northmarqcompass.com