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Rosie Brunmeier of Madison East Center/Coldwell Banker Fisher Commercial Group.

Commercial boom continues

Growth reshaping commercial landscape Also in this issue The Dork Den Gag Sheet Metal Gregg Andersen’s drones

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4 • June 2014 • MN Valley Business

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F E A T U R E S June 2014 • Volume 6, Issue 9

14

Growth in Mankato is reshaping the office market, squeezing warehouse space and attracting new retail developments.

20

Joe Huber and Greg Fenske, business partners at The Dork Den, met in 2011 while working at a similar business, where they soon discovered they held a passion for board games.

22

Gregg Andersen has seen dramatic changes in his photography business over the years, moving from darkroom to digital. Now Andersen is delving into the area of small drone photography.

26

For 110 years, Gag Sheet Metal of New Ulm has been a family owned business founded by George Gag and a partner, whom he later bought out. Today John and Steve Gag run the business.

MN Valley Business • June 2014 • 5


■ June 2014 • VOLUME 6, ISSUE 9 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner Kent Thiesse Heidi Sampson Harry Melander William Blazar PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Jen Wanderscheid Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.

■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 12 ■ Construction, real estate trends.. 29 ■ Agriculture Outlook...................... 30 ■ Agribusiness trends..................... 31 ■ Job trends..................................... 32 ■ Retail trends................................. 33 ■ Greater Mankato Growth.............. 34 ■ Greater Mankato Growth Member Activities ....................... 36

6 • June 2014 • MN Valley Business

From the editor

By Joe Spear

Commercial growth to explode

T

he Mankato region’s business development appears to be turning a corner of sorts and coming to a crossroads. For years, commercial development has been moderately steady. We’ve added a strip mall here and there, maybe a new fast-food franchise or two. But 2014 marks a year that will likely be historic for commercial development, as our cover article this month makes clear. While the River Hills Mall was the biggest development of the 1990s in Mankato, several projects taken together this year will equal or surpass that development. There’s the Wal-Mart Distribution Center that is breaking ground this spring. The Tailwind Group has broken ground on the biggest new office development Mankato has ever seen. A new Fed Ex distribution center is also taking off. Mankato’s medical community is continually expanding from the Open Door health clinic to Mankato Clinic’s Wickersham campus. We’re seeing expansion of retail/ housing projects near Minnesota State University. That was a concept that debuted with a renovated University Square a few years ago. Now, apartment complexes are being constructed on top of small retail stores off Stadium Road and Monks Avenue. That all of this is happening at the same time suggests a kind of turning point for development. We seem to be nearing a critical mass of development that will only give birth to more development. Housing is not far behind all of this. But it’s a little surprising that much of the new housing coming online is multiple family housing and apartments. Observers say developers will have little problem filling those buildings. Adding to this development boom will be several projects recently approved by the Minnesota Legislature. Mankato finally won approval for its $14.5 million civic center expansion request. The bonus is that there will be a good amount of flexibility with that

money as it was funded with the state’s surplus cash instead of borrowed money through the bonding bill. The Verizon Center expansion will accommodate more trade shows and conventions that find the current space too small. At the same time, it will open up the civic center calendar so the facility can host trade shows or conventions on the same weekends that MSU hockey plays its home games. And just 10 miles up the road, the St. Peter Regional Treatment Center will begin a $63 million renovation. MSU also gained approval for its $26 million clinical sciences building. Legislators like the project because it seemed to attack a workplace need for clinical science practitioners and hands on programs that have shown to be successful. The Mankato school district also is in the midst of building a new middle school and initiating renovation projects that go into the millions. And finally, regional roads will get major renovation and upgrading. The two roundabouts at Mankato’s busiest commercial intersections are likely to have dramatic positive impact on traffic flow, if they work as promised. Some $70 million of improvements to Highway 14 between Nicollet and Owatonna will also be on the development list for the next couple of years. Taken together, these events cannot help but have a dramatic impact on the regional growth. As with any kind of growth, there will be some negatives that will have to be watched closely. Those using Highway 14 will have to get used to a new realities of hundreds trucks a day using the areas near the Wal-Mart Distribution Center. It’s going to seem like a big city. The challenge will be to try to benefit from things growth can bring, higher incomes and better and more jobs, while mitigating the social negatives of crime and inequality. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com


Local Business People/Company News

Grace joins Blethen, Gage & Krause

Blethen, Gage & Krause announced Jeffrey Grace is their newest associate attorney. Grace comes to the firm with extensive trial experience and focuses his practice in the areas of litigation and insurance law. ■■■

Community Insurance honored

Community Insurance was awarded one of the Top Producing Agencies for Fairmont Farmers Mutual Insurance Company in 2013. Community Insurance has offices in Mankato, Amboy, and Vernon Center. Fairmont Farmers Mutual Insurance Company has been providing insurance for more than 100 years. ■■■

I+S Group earns Best Places to Work award

I+S Group was honored by Workforce Development Inc. as one of the best places to work in southeast Minnesota at the organization’s awards banquet in Rochester in April. I+S Group was noted for its well-developed mentoring and wellness programs. Each participating company was required to complete a 40-question survey that allowed their employment practices to be analyzed by a consulting firm. The data was measured on such parameters as turnover, rate of growth, promotion rates, diversity of management, paid days off and increase in pay. ■■■

Anderson gets humanitarian award

Dr. Steven O. Anderson of Mankato was presented with the 2014 George T. Tani Humanitarian Award by the Minnesota Academy of Ophthalmology. Anderson is an ophthalmologist who last year returned from a five-year mission in Borneo where he established a long-term eye care program to serve the poor of the region. His work in that region laid the foundation for him to create global eye Dr. Steven O. mission (GEM) which partners with Anderson seven other ministries throughout the world. Anderson returned to Mankato in September of last year and began to practice at Ophthalmology Associates of Mankato in the office that his father, Dr. Oscar Anderson began in 1961. ■■■

Thielges named partner at Eide Bailly

Thielges from the firm’s Mankato office. This brings the total number of partners to 202. Thielges has more than 13 years public accounting experience serving clients in a variety of industries, including real estate, health care, professional services and renewable energy. She provides tax compliance, planning and consulting services to both businesses and individuals. She also performs business valuation services for estate and gift tax purposes, litigation, purchasing and selling businesses and marital dissolution. ■■■

Schooff earns SIOR designation

David Schooff, president of Coldwell Banker Commercial Fisher Group, recently earned his SIOR designation. The Society of Industrial and Office Realtors is the leading professional commercial and industrial real estate association. ■■■

Jordan Sands chooses contractor

Jordan Sands has contracted with Market & Johnson to construct its new industrial sand processing facility. Founded in 1948, Market & Johnson is the largest general building contractor in western Wisconsin. The company has experience constructing high-performing sand plants. Jordan Sands plans to start operating the silica sand plant north of Mankato this fall. ■■■

Enventis promotes Olsen

Enventis has promoted Mike Olsen to vice president of customer experience. Olsen will provide overall leadership of the Enventis customer experience supporting all customer segments. Olsen will manage the customer support functions for Enventis including the call center, support services, project management and business process teams. Mike Olsen Olsen has been with the company 21 years and previously served in various sales management roles including as director of sales and as general manager of the company’s local exchange carrier business. ■■■

Symmetry Nutrition moves

Symmetry Nutrition Club has moved to 1351 Madison Ave. in the Mankato Design Center complex.

Ten staff members were recently accepted into the partnership of Eide Bailly, a regional certified public accounting and business advisory firm, including Heather

MN Valley Business • June 2014 • 7


Weldon featured at forum

Jeff Weldon, United Prairie Bank chief financial officer, was a featured speaker at the Fiserv Forum in Las Vegas in May. Fiserv is one of the world’s largest providers of technology solutions to financial institutions. Thousands of community bank executives and management team members from across the country attend the annual event. Weldon’s session focused on utilizing client preferences to build banking products that will increase customer loyalty in utilizing electronic-based payment solutions. ■■■

Jeff Weldon

Klesath, Meyer joing Weichert

Realtors Bob Klesath and Judy Meyer have joined Weichert Realtors Community Group. With nine years of experience in real estate, Meyer will assist property buyers and sellers in Mankato, North Mankato, and surrounding communities. Originally from St. Louis, Mo., she now lives in Lake Crystal. A North Mankato resident with several years of experience in real estate, Klesath Bob Klesath Judy Meyer serves clients in southern Minnesota. He is originally from Council Bluffs, Iowa, and has a background in wholesale food distribution and cattle raising. ■■■

Thoen named to council

Gregory Thoen, a private wealth advisor with Ameriprise Financial, was recently named to the 2014 Chairman’s Advisory Council. He qualified based on distinguished performance and client service. ■■■

Mankato Marriott ranked among best

The Courtyard Mankato won a 2013 Platinum Award from Marriott Hotels, ranking it in the top 5 percent of 897 Courtyard hotels around the world based on guest satisfaction surveys and its rating on Trip Advisor as the number one hotel in Mankato. The hotel is the first LEED certified hotel in Minnesota, featuring a sustainable design that includes more than 190 locally made solar panels. ■■■

Smith named director at Eide Bailly

Partner Gary Smith has been named the new director of financial institutions at Eide Bailly. Smith officially assumed his new role on May 1. He succeeds previous director Linda Koerselman, who will continue in her roles as partner-in-charge of the firm’s Mankato office and as chairman of the Eide Bailly board. ■■■

Williams joins CENTURY 21

Stacey Williams has joined CENTURY 21 Landmark Realtors as a broker associate. She specializes in residential property sales in Southern Minnesota. She has been a licensed real estate salesperson since 2004 and a licensed broker associate since 2012. She represents buyers and sellers, as well as short sale and foreclosure properties and relocation.

8 • June 2014 • MN Valley Business


Business and Industry Trends

Economy

Economic indicators mixed

New orders for durable goods rose 2.6 percent from February to March according to the U.S. Census Bureau. The gain was more broad-based than from January to February, as it was driven by transportation, defense, and core capital goods, beating expectations. The Federal Reserve’s industrial production index also gained 0.7 percent in March, and the February estimate was revised upwards. The news on the housing market, however, was less upbeat. Census reported that sales of new single-family homes fell 14.5 percent from February to March, and were 13.3 percent below the March 2013 estimate. The Bureau of Economic Analysis estimates that real gross domestic product increased at an annual rate of 0.1 percent in the first quarter (that is, from the fourth quarter of 2013 to the first quarter of 2014). Forecast real GDP grows by 2.3 percent in 2014 and 2.9 percent in 2015, lower than previously forecast. The lower 2014 GDP growth forecast reflects concerns about lower inventory growth, first quarter weather, and capital spending and exports. In 2015, the reduced growth rate results from lower expectations of growth in the housing market and residential construction, and the subsequent impact on housing-related expenditures.

■■■

Energy

Gas costs lower next two years

During the April-through-September summer driving season this year, regular gasoline retail prices are forecast to average $3.61 per gallon, 3 cents higher than last year, according to the Energy Information Administration. Regular gasoline retail prices are expected to average $3.48 in 2014 and $3.39 in 2015, compared with $3.51 in 2013.

Crude oil stays steady for months

Brent crude oil spot prices averaged $108 per barrel in April. This was the tenth consecutive month in which the average Brent crude oil spot prices fell within a relatively narrow range of $107 to $112. New pipeline capacity from the Midwest into the Gulf Coast helped reduce inventories at the Cushing, Oklahoma storage hub to 25 million barrels by the end of April, the lowest level since October 2009. The government expects Brent crude oil prices to average $106 in 2014 and $102 in 2015.

production, which averaged 7.4 million barrels per day in 2013, is expected to increase to 8.5 million in 2014 and 9.2 million in 2015. The 2015 forecast represents the highest annual average level of production since 1972.

Gasoline use growing

Motor gasoline consumption grew by 90,000 barrels per day (1.1 percent) in 2013, the largest increase since 2006. Motor gasoline consumption grows by 20,000 barrels a day in 2014 and remains flat in 2015 as improving new vehicle fuel economy increasingly offsets highway travel growth.

Natural gas consumption up

The government expects total natural gas consumption will average 72.3 billion cubic feet per day in 2014, an increase of 1.3 percent from 2013, led by the industrial sector. In 2015, total natural gas consumption falls by 0.1 Bcf/d as a return to near-normal winter weather contributes to lower residential and commercial consumption.

Renewable consumption to rise

Total renewables consumption for electricity and heat generation will grow by about 3.3 percent in 2014. Hydropower is projected to increase by 2.9 percent, while nonhydropower renewables rise by 3.6 percent. In 2015, projected renewables consumption for electric power and heat generation increases by 3.2 percent from 2014, as a 0.3 percent decrease in hydropower is combined with a 5.1 percent increase in nonhydropower renewables.

More wind power coming

Wind power capacity will increase by 9 percent in 2014 and 16 percent in 2015. Electricity generation from wind is projected to contribute 4.5 percent of total electricity generation in 2015.

Ethanol prices lower, production up

Railroad delays because of extreme winter temperatures in the Midwest contributed to sharp ethanol price increases across the United States in February and March, especially on the East Coast. These rail constraints have since eased and ethanol prices fell as ethanol production increased from an average of 890,000 barrels per day in March to more than 910,000 barrels per day in April. Ethanol production is forecast to average 911,000 barrels per day during 2014 and 922,000 barrels per day in 2015.

Biodiesel production falls

Biodiesel production reached 104,000 barrels per day (135 million gallons) in December 2013, then fell to 54,000 barrels per day in January following the expiration of the biodiesel production tax credit at the end of 2013. Biodiesel production averaged 89,000 barrels per day in 2013 and is forecast to average 84,000 barrels per day in 2014 and 86,000 barrels per day in 2015.

U.S. oil production high

U.S. total crude oil production averaged 8.3 million barrels per day in April, the highest monthly average production since March 1988. U.S. total crude oil

MN Valley Business • June 2014 • 9


Minnesota Business Updates

■ Cold winter hits Johnson The bitter cold of the past winter hurt the quarterly earnings of Racine-based Johnson Outdoors, according to the Milwaukee Journal Sentinel. The company reported lower sales for the fiscal second quarter, “due primarily to prolonged harsh winter weather during the period,” the company said an earnings report. The harsh weather coupled with record-high revenue a year ago made for a tough comparison, the company said. Johnson Outdoors said it reduced operating expenses but the savings were not enough to offset the effects of lower sales on operating profit. “Unpredictable weather conditions are always challenging for the highly seasonal outdoor recreational industry, and this year’s unusually long and frigid winter has shifted the pacing of customer orders to more closely align with the retail-selling period of our products during the spring and summer months,” Helen Johnson-Leipold, chairman and chief executive, said in the report.

■ General Growth partners with RetailMeNot

Chicago-based General Growth Properties, owner of River Hills Mall in Mankato, announced a strategic partnership with Austinbased digital coupon website

RetailMeNot. The deal makes RetailMeNot the preferred digital coupon provider for the malls under the GGP banner, according to the San Antonio Business Journal. For GGP, the partnership could prove to be a very strategic plan for increasing both foot traffic and sales for the stores in its centers. GGP’s CEO spoke about mixing digital convenience with bricks-and-mortar shopping in a recent story at CNBC.com.

■ End of an era at Fastenal Fastenal co-founders Bob Kierlin and Steve Slaggie, whose names are inseparable from the company’s nearly 50-year legacy, officially cut ties with management of the Fortune 500 company when they stepped down from the board of directors. Both having reached the mandatory retirement age of 75, according to the Winona Daily News. Of the company’s original Founding Five, only Mike Gostomski still sits on the board, and will reach retirement age next year. Kierlin, Slaggie, Gostomski, Jack Remick and Henry McConnon formed Fastenal in 1967 after the five friends pooled together $30,000 to open the first Fastenal store in Winona. The company recorded first-month sales of $157. Compare that to the more than $876 million in sales reported in the first quarter this year. Kierlin came up with the idea for what would become Fastenal while working in his father’s store in the 1950s, noticing that no single store in town could stock all of the parts customers needed for their projects.

10 • June 2014 • MN Valley Business

■ Enventis net income up 27 percent Enventis reported net income of $2.1 million for the first quarter ending March 31, an increase of 27 percent yearover-year. EBITDA totaled $12.1 million in the first quarter, an increase of 11 percent. Revenue totaled $44.2 million and was down 9 percent from first quarter 2013, primarily due to lower equipment sales, which were down 35 percent year-over-year. Services revenue, which accounts for 77 percent of the company’s revenue, increased 2 percent.

■ 3M aims at bigger acquisitions 3M says it wants to shop more big-ticket, less bargain-basement. Chief executive Inge Thulin reiterated that point recently as he released the company’s financial results, according to the StarTribune. Thulin said 3M can do deals that exceed $1 billion. “I think the biggest acquisition 3M had done ... is a $1 billion or so,” Thulin told analysts during 3M’s earnings call in late April. “In some spaces, in order for us to be more relevant, we maybe need to do slightly bigger than that as we move ahead.” The $30 billion conglomerate plans to spend anywhere between $5 billion and $10 billion on acquisitions between 2013 and 2017, a move that could extend 3M’s already vast reach and fortify its existing businesses. Some Wall Street analysts have speculated that 3M will pursue companies that can foster its security ID or its medical records software businesses, areas that are likely to see robust growth given recent security breaches and the increasing desire by the medical community to protect patient information.

■ Shareholders OK Enventis name HickoryTech shareholders made it official last month, ratifying the company’s new name as Enventis Corporation. The Mankato-based telecom has been operating under the Enventis name for months but needed shareholder approval to make it official. Later this week the company will begin trading its stock under the new NASDAQ ticker symbol “ENVE.” The 116-year old company began as Mankato Citizens Telephone Co. and later became HickoryTech. In 2006, HickoryTech acquired Enventis, a business-to-business provider, which more than doubled the reach of the company’s fiber network. In 2009, the company acquired CP Telecom to bolster its small- and medium-business services. Two years ago, Enventis acquired IdeaOne, a Fargo-based business and broadband provider.


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MN Valley Business • June 2014 • 11


Business Commentary

By Harry Melander and William Blazar

A pipeline to jobs, economic and energy security

B

eginning in 1973, headlines announcing the results of a meeting of OPEC ministers often sent shockwaves through the American economy. From the founding of the nation until that time, the United States had never been beholden to other nations in determining our economic well-being. It took almost 40 years, but we are finally on the verge of reclaiming control of our energy future and, consequently, protecting American energy security. In 2017, the United States will be the largest oil and natural gas producing nation in the world. By 2023, we can be 100-percent independent in North America with our trading partner and neighbor Canada. Achieving this independence has not been easy, and more remains to be done. Minnesota, for example, has been at the end of every petroleum supply pipeline since the early 20th century as crude oil arrived here from southern sources in Texas, Oklahoma, the Gulf of Mexico and abroad. As a result, pipelines were constructed to move oil from south to north. Today the vast sources of oil and natural gas produced in North Dakota and Canada promise to put us near the front of the pipeline, if the infrastructure is retooled to allow it. Enbridge has proposed expansions of its pipeline system that extends from both Alberta and the Bakken Field in North Dakota to refineries that produce motor fuel and other products that are sold in Minnesota. These expansions will dramatically increase capacity and take us one more step toward North American energy independence. Enbridge’s effort is not without controversy and has detractors across Minnesota. Opponents of expansions fall into two categories. The first group is comprised of local groups supported with slanted information and financial support from international organizations like Greenpeace and the Natural Resources Defense Council. These local groups, in turn, attempt to create unsupported fears about pipeline expansions to incite opposition to the delivery of North American crude oil. The second group is comprised of landowners and our

12 • June 2014 • MN Valley Business

communities along the pipeline route. We believe these folks deserve the truth. The questions raised by community leaders and citizens about pipeline safety are reasonable; and, the answers are straightforward and clear. Pipelines are the safest means of transporting crude oil with a 99.999-percent success rate, according to industry statistics. Thousands of miles of pipeline in Minnesota deliver crude oil 24/7/365. And, new pipeline proposals like the Sandpiper project that will cross northern Minnesota will include the most modern safety technologies available. As you weigh the costs and benefits of pipeline development, please review the facts. As representatives of the skilled craft workers and businesses located in every corner of Minnesota, we have reviewed the facts and the science because our members build these projects or provide services as vendors of equipment, food, lodging, etc. Our members hear what landowners are saying, and we are confident their concerns can be addressed. However, we are also hearing from Minnesotans everywhere that having access to North Dakota and Canadian energy resources safely delivered will increase employment and improve the economy. The ultimate choice is whether we follow the advice of groups like Greenpeace and “turn back the clock” to the days when OPEC ministers determined our energy security. MV Harry Melander is president of the Minnesota Building and Construction Trades Council. William Blazar is senior vice president of public affairs and business development at the Minnesota Chamber of Commerce.

Correction

A commentary from Eide Bailly in the May issue about financial planning for couples getting married contained an error caused by misplaced punctuation. When discussing tangible property the article intended to state that Minnesota is a separate property state.


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MN Valley Business • June 2014 • 13


City civic and business leaders turn out for the 1968 groundbreaking of Madison East Center, which quickly became Mankato’s premiere shopping center.

Filling in, growing out Commercial development on a hot pace By Tim Krohn | Photos by John Cross and Pat Christman

A

booming market is reshuffling the Mankato commercial real estate landscape. Thriving retail and industrial sectors means there is virtually no warehouse space available. An unprecedented amount of new office space being built in downtown Mankato will leave some current landlords scrambling to fill space and will reclassify some office space now considered premiere to a lesser category. A steady infill of strip malls in smaller lots along Madison Avenue is now pushing new development to the east and northeast of Mankato’s edges, with an abundance of prime bare building sites available. And a resurgence of what was once Mankato’s retail jewel – Madison East Center – is leading to a major renovation of the 45-year-old building. Office shakeup Tailwind Group is in the midst of constructing three

office and mixed-use towers in one block of downtown Mankato which will add some 100,000 square feet of new high-end office space. “That’s exciting. That’s never been done in Mankato,” said Tim Lidstrom, owner of Lidstrom Commercial Realtors. “That’s going to change the dynamics of other office space. Some of the A space will become B space and some of the B space will become C space,” said Lidstrom of the quality rankings given to office space. Lidstrom isn’t worried there will be a huge glut of office space after the construction is done late this year and into early next year. “For a long time there was a lot of office space built on the hill, but after a while the market absorbed them,” he said. “Some of the landlords that will lose some tenants will have to work a little harder, but it’s part of the growth cycle.”

Cover Story

14 • June 2014 • MN Valley Business


Top: Dave Schooff of Coldwell Banker Comercial Fisher Group, at a prime piece of commercial property at the intersection of Highway 14 and Victory Drive. Bottom: Tim Lidstrom, of Lidstrom Commercial Real Estate, at the new Starbucks development on Madison Avenue next to the Crossroads Center. Dave Schooff, president of Coldwell Banker Fisher Commercial Group, agrees the construction, along with other activity is a good sign of growth and doesn’t see Mankato being overbuilt in any sector. Schooff said that beyond the big project downtown, office leasing has been fairly strong but not huge. “Part of it is businesses are looking at things differently. They’re not looking at as many square feet per employee as in the past. There are some people working from home and the (recession) makes people a little more cautious,” Schooff said. Madison East makeover One of the places that has slowly transformed into a major office space is Madison East Center. The shopping center that opened in 1968 was the powerhouse that led retail development on what was then an open frontier on Mankato’s east side. As more big-box stores were built and River Hills Mall opened in the early 1990s, Madison East emptied of most of its retail tenants and struggled to find its place in the market. But over the years it’s become a successful professional commercial property with many medical offices and everything from attorneys and mortgage businesses to travel and employment agencies. Madison East is 90 percent leased according to Rosie Brunmeier, who manages the space for Coldwell Banker Commercial Fisher Group and is a sales and leasing agent. With the property showing its age in its fifth decade, the owners are doing a major renovation. Madison East was

built and is still owned by the Lund’s grocery store family and sits on land under a 99 year lease with the Kearney family. “We will give the center a clean, new, professional image yet we will maintain our southern Minnesota landmark identity,” Brunmeier said. “We’re giving it a professional look rather than a retail look. “We have a new logo and will be revamping the parking lot and the whole southern façade, along Madison Avenue.” The old marquee sign will come down and be replaced with new signage on the corner of Victory Drive and Madison Avenue and at Victory and Adams near the back side. The parking lot will get new LED lighting and landscaping will be done around the edges of the lot. And in a city seeing roundabouts pop up all over, one more will be added at Madison East. This roundabout won’t be on the street, however, but inside the parking lot at the main entrance. Currently, cars coming in the main entrance start cutting across the large parking lot in various directions and angles. The roundabout will direct the traffic in different designated routes depending on which part of the center they want to get to. The projects are slated to be done by the end of October. The center is also benefiting from the completion of the Adams Street extension on the back side of the center, providing better access and more visibility. The street was built last year to accommodate a large housing, retail and office development that will run behind Madison East and

MN Valley Business • June 2014 • 15


This is an artists rendering of the renovated Madison East Center main entrance off of Madison Avenue along North Victory Drive. That project, on a large piece of Kearney property is starting this summer with construction of the first phase of up-scale apartments. The completion of Adams makes some of the parking lot area behind Madison East a good spot for outlots for restaurants, strip malls or other developments. But Schoooff said those types of developments are complicated because the Kearney family, which owns the land the mall sits on, and the Lund family would have to come to an agreement on how it would be handled. Projects ready to go at record level “It’s amazing how many pre construction projects there are,” Lidstrom said. Projects that have committed to building include Fleet Farm, a new Wal-Mart distribution center, a new Kia dealership, a new Design Center and a Fed Ex ground facility both north of Menards, and several retail strip malls. “You’re going to have some 1,500 more jobs after all that’s built by the end of next year,” Lidstrom said. There will also be a new school somewhere on the east side of the city. “That will generate some additional opportunities around it, for house for sure,” Lidstrom said. Schooff and Lidstrom said commercial development is clearly pushing straight east and north and northeast of Mankato and big projects like Fleet Farm are only going to accelerate the growth. “We have hundreds of acres of commercial land and there’s still a good amount of industrial land, multi-family land and single family.” Lidstrom said. “We’re blessed with lots of good land here. We’re not boxed in like some river towns get.” While the outlying edges of Mankato are a big focus for development, Schoof said the corridors around Madison Avenue and Victory Drive is booming as well. “We’d talk to nationals (retailers) and they’d say we’re not going there. Then they saw the traffic counts and say ‘wow’ that’s a hot corner.”

16 • June 2014 • MN Valley Business

Perhaps the most expensive plot of bare commercial land on the market now is a 44 acre site at the corner of Highway 14 and North Victory Drive, listed for $11.6 million. Schooff said that while that price tag is big, his firm helps put together a lot of other deals that aren’t publicly listed for as much or more. “We have some listing that we don’t publicize that are investment properties that are substantial. We do that through a network of real estate group throughout the country. We don’t publicize those at their request,” Schooff said. “When you get to these larger projects purely designed for investors, there are folks specifically looking for real estate investments to mix into their portfolio.” The more popular investments are for properties where a strong retailer is in a long-term lease on the property. “The Walgreens and CVS type properties are big. Those deals are handled by large real estate firms out of New York.” Schooff said. Warehouses hot commodities Lidstrom and Schooff said anyone with warehouse space for sale or lease is in a good position these days. All of the growth in the industrial and retail sectors have led to warehouse space being snapped up. Many businesses prefer to lease warehouse space rather than build their own because it’s more flexible as their business goes up or down and more or less warehouse space is needed. “It’s the tightest market for warehouse I’ve seen in my 30 years,” Lidstrom said. “There is going to be construction because there just isn’t any properties out there.” Strong business all around Mankato’s boom is being driven by many long-time and newer local developers, but also more outside investors. “You’re getting more investors with interest out of the Twin Cities than in the past. And the local developers who want to invest and make commitments to acquire something because they see a positive market here,” Schooff said.


Top: The big marquee sign that has stood for decades will be replaced with new signage that will be placed at the Madison Avenue and Victory Drive intersection. Bottom: The inside of Madison East Center has been renovated over the years, helping transform it from a shopping center feel to a professional office space.

MN Valley Business • June 2014 • 17


You’re Invited

Southern Minnesota Business Summit A Summit for Closely Held Businesses with an Eye on the Future

Tuesday, July 15, 2014 9 a.m. – 4:30 p.m. Country Inn & Suites, Mankato $50 registration includes a binder of materials for the event. Topics will include: • • • • • • • • • •

Audit and Accounting Update Buy-Sell Issues Trust Management Nontraditional Financing Business Divorce E-Commerce Litigation Management Multistate Tax Doing Business Internationally Asset and Business Sales Acquisitions To register, contact: jfaust@eidebailly.com or mgustafson@gislason.com Hosted by

Workers are completely renovating the Crossroads Center which is on the opposite side of Madison Avenue from Wal-Mart. Lidstrom said last year was his best year in his 30-year career. We did an awful lot. Four or five strip malls, an abundant amount of land sales, retail, industrial.” Multi-family construction continues at a brisk pace and is expected to for years to come. Recent housing studies commissioned by the city show a huge need for more apartments over the next decade. Retail remains strong with both big projects such as Fleet Farm and a host of strip mall construction that filled in smaller lots. “Strip malls fit certain property types very well. They’re flexible and have shared parking – those new franchises and businesses gravitate toward that,” Schooff said. “We’re

18 • June 2014 • MN Valley Business

not over-built with them.” The strip mall boom has also been going on around the Minnesota State University campus, but with a slightly different twist. “You see more there with retail on the first floor and housing on the upper floors,” Schooff said. MV


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MN Valley Business • June 2014 • 19


Joe Huber (left) and Greg Fenske are business partners at The Dork Den,

Off-line gaming The Dork Den specializes in tabletop play

J

By Heidi Sampson | Photos by John Cross

oe Huber and Greg Fenske, business partners at The Dork Den, met in 2011 while working at a similar business. As the two discovered they held an identical passion for board games they decided it was time to try out some of their own business ideas. Located one block north of their initial location on Riverfront Drive in Mankato, The Dork Den has kept a stream of comics, graphic novels and board games available for their enthusiasts. “Originally, we had about 800 square feet in our other location,” Huber said. “After our initial year, we had found we had grown which required a larger space.” During the summer of 2012, the Dork Den moved to its current location on Riverfront. By January of 2014, they expanded yet again, growing within their building to occupy 1,800 square feet for retail and nearly that much space for playing board games. “Our play space is a big part of creating that community,” Huber said. “It lets our customers know that there are lots of other people out there who play these games as well. No

one wants to spend $40 or $50 on a board game and then watch it sit on their shelf. We want to be a place where board gamers can meet people who play these games too.” Let’s play Throughout the week, The Dork Den hosts many events to accommodate and encourage game playing among their customers with entire evenings dedicated to activities like, Yu-Gi-Oh, miniature gaming, Dungeons and Dragons and board games. The nightly games kick off around 6:30 p.m. with a wide age range of game enthusiasts from teenagers to the elderly, all who enjoy a little friendly game competition. “The idea of play has been vital to our business model,” Huber said. “We’ve found that our customers want a place to play and to meet other people.” The Dork Den also has a demo board game library of more than 50 titles. If a customer cannot decide which game they’d like to purchase, they are welcome to try a demo of a game they are considering. When a customer

Profile

20 • June 2014 • MN Valley Business


Dork Den, 603 N. Riverfront Dr. (507-386-1406) Schedule of Events: Monday - Miniatures Tuesday - Magic the Gathering Tournament Wednesday - Role playing with games like Dungeons and Dragons and Yu-Gi-Oh Thursday - Board games and Magic the Gathering Drafts Friday – Friday Night Magic Saturday – Rotating Game Theme Sunday – Yu-Gi-Oh and Commander format Magic the Gathering

The Dork Den moved to a larger building and then expanded again to keep up with demand. demo’s a board game, they are able to sit down with others while learning its specific rules to see if they liked it. If a customer requests a game, in which there isn’t a copy to demo, chances are Huber and Fenske know of somebody in the community who could bring that particular game down to the store for a personal demo. “The gaming community is pretty close knit,” Huber said. “They are very good about showing people games and getting people into their hobbies because that means there are more people playing their hobbies.” Board game hobbyists Huber and Fenske believe that those who play the Xbox or games online are almost the same communities as those who frequent their store. “For a long time everyone was playing on their Xbox or PC but we are seeing a shift in that trend,” Huber said. “Although a lot of our games have iPad apps or other electronic versions also available, we are finding that people still prefer the interaction of playing with someone who is across the table. We feel our customers enjoy sitting across the table rather than talking through a headset to each other.” For Huber, he has been a hobbyist of board games since the age of 13 when he started actively playing Magic: The Gathering. Since that time, he has dabbled in many games including everything The Dork Den offers. Fenske too, started his love affair with board games as a teenager but a lacked competitor willing enough to play on a consistent basis. “In the Mankato area there have been places like this that have come and gone,” Huber said. “We want to be that positive foundation or rock, a place where people can go to meet other players. We want to find the people who are playing the games. Not just having them sit on their shelf collecting dust. It is important to us both as enthusiasts.” Building future gamers Recently, Fenske and Huber hosted a game day at Waseca’s public library. Where the Mankato school district participates in late mornings, Waseca does the opposite with a monthly early out day. On those days the library tries to do something special for the children who may not have a place to go or are looking for something different to do. As a result, The Dork Den was invited to host a

Hours: Monday thru Saturday: Noon-10 p.m. Sunday: Noon-8 p.m.

game day at the library. “We had a very diverse group,” Huber said. “There were kindergarteners to seventh graders all playing games together for an afternoon. We had a great time.” Spearheading a movement Currently, The Dork Den sells primarily to those who are south and southwest of Mankato rather than south east, as both Rochester and Owatonna have similar stores. Miniatures games such as Warhammer 40K, Warmachine/ Hoarders, tend to draw customers from a greater distance as the closest store carrying them is in the Twin Cities. This allows the Dork Den to draw customers from northern Iowa, as well as some parts of South Dakota. “For us, Magic: The Gathering is the big boy on the block as far as collectible card games but then so is Yu-GiOh,” Fenske said. “We tried to support Yu-Gi-Oh when we first opened but the community just didn’t take to it. We got one or two players at a time. Finally, a guy who’s really passionate about the game kind of spearheaded the movement, now we have Sundays and Wednesday dedicated to that game.” A game for everyone The Dork Den’s future goal is to become more active by hosting gaming events out in the community. Fenske and Huber would like to bring gaming out to the people, as they feel it is a great way to encourage community spirit, as well as foster future players. “I guarantee there is a game out there for everyone,” Huber said. “We have games that can take as little as 15 minutes or up to 15 hours. That has been the biggest change in the board game industry. Today, most games have an end point. They can no longer last forever. Most of the games made will fit with that hour to hour-and-a-half time frame. There still are a few epic games that are all day MV events but most games aren’t.”

MN Valley Business • June 2014 • 21


Andersen is documenting the construction in downtown Mankato, including this sevenstory office tower going up at the corner of Riverfront Drive and Warren Street.

Eye in the sky Gregg Andersen delves into drone photography By Peter Steiner Photos by Pat Christman

A

mad, whirring sound, like the intense buzzing when nearing a beehive. Suddenly the lightweight, white drone is 60 feet aloft, then 200. Several teenage bicyclists quickly gather, gawking from the edge of the downtown parking lot. For Gregg Andersen, technically, this is work.

dramatic addition he’s brought to his longtime photography business. Or he could be talking about the dramatic evolution of South Front Street that he’s been hired to chronicle. After several days of waiting, the sun is finally out and the wind is finally down. We stroll out into the parking lot adjacent to his temporary offices. He grabs a square, carbonfiber device from the back of his vehicle. It’s about 18 inches across, with four six-inch rotor blades evenly spaced around the central unit, which contains a battery plug-in and a high-tech digital camera. It’s an unmanned

Spotlight

•••• “This, to me, is exciting. This is a big deal.” Andersen could be talking about the

22 • June 2014 • MN Valley Business


aerial vehicle, or UAV, or, as it’s more commonly called, a drone. The military applications of UAV’s have been widely chronicled, but Andersen is about to demonstrate how drones are revolutionizing the venerable art of photography. •••• Gallery 19 – Gregg Andersen. The name is the same, but just about everything else has changed. Sure, there is still the traditional senior portrait business; and a man arrives to pick up photos of a church confirmation group. There are glossy photos of sports teams and players waiting to be picked up. There’s industrial work for business brochures and websites. But the digital revolution has dramatically altered the process of photography. Long gone is the darkroom, once the heart of the photographic art. Now Andersen transfers digital images from his camera to his desktop computer, trims and tweaks them, then sends them to his new digital photo-mural printer, a five-foot wide, waist-high machine that can be tucked against a wall. As high-resolution images roll off it, he acknowledges, “The paper is real spendy” – from $250 to $400 a roll, and it costs “$1,500 [just] to ink up the system.” The location has changed, as well. Born into the business, Andersen joined his father, renowned portrait photographer, Ron Andersen, as a kid, helping out in the dark room. “I probably took my first photos when I was 10.” Soon to be 62, “Gargo,” as his friends have called him since high school, went into business for himself in 1978 at 419 North Front. That space is now a parking lot. He moved farther out on North Riverfront, into a long gray studio building across from Hank’s DX, for 20 years, before moving in on the corner next to the Wagon Wheel. That space was hit by fire in March, and he’s still waiting on the insurance settlement. So he’s temporarily across the street in the brick building adjacent to Walgreen’s parking lot. “Here I am, at the Lost Chord!” he grins, referring to the beloved head shop and record emporium that filled the space in the ’70s and early ’80s. •••• Andersen used to do traditional aerial photography from small planes. In fact, he is a licensed pilot. But three years ago, he took the plunge and bought his first drone online. In the last two years, especially, demand for his drone photography has, one might say, skyrocketed. Farmers and real estate agents want pictures of their land. So do environmental groups. Manufacturers with large warehouses ask him to observe the farthest reaches of their buildings, or give an overhead view of operations. Twenty percent of his drone business is shooting indoors. The Tailwind Group has retained him to document progress on their massive redevelopment of the 500 block of South Front Street, thus, when the weather finally breaks, he knows he has to act. He slips a microdisc into the digital camera, then clicks a battery unit into place on the drone’s central unit, which has its own GPS system. He mounts an iPhone on the control unit to serve as a monitor of what he’s shooting. The iPhone is also the device to which he’ll download his photos. Andersen remotely fires up the drone’s motor, and it shoots skyward. Immediately it provides dramatic panoramic views of the Mankato downtown and the

Top: Gregg Andersen with his drone camera in downtown Mankato. Bottom: Andersen connects an iPhone to the drone to be able to view what the camera is seeing while in the air.

MN Valley Business • June 2014 • 23


nearby river valley. The control unit for the drone employs joysticks to control movement, and is similar to what you’d use for a model airplane. But for this job, Andersen seeks an ideal vantage point where the drone can hover. The device can stay aloft on battery for about 45 minutes. This day, Anderson will shoot about 200 frames and some video in a 20-minute session. He can pan out, or if he wanted to, zoom in for a close-up on somebody’s face at the work site. “One day, somebody called the cops. They were concerned (about what might be going on.)” The police know Andersen – he’s basically their neighbor downtown – and they simply called to make sure it was him. The Federal Aviation Administration will eventually weigh in on how Andersen and other drone photographers can do business. But for now, commercial drone regulation is a grey area in this country, as officials do research on what should or could be done. •••• The photo shoot done, Andersen brings the drone back to earth, a smooth, gentle landing. “This is really a kick, isn’t it?” he exclaims, and we go inside to examine the results. He’s talking all the way: “I’ve never really had to go to work. It’s that fun.” He connects the iPhone to a larger monitor and begins transferring the downloaded photos for closer examination. There are definitely some keepers. “I will be doing photos of all the progress along South Front,” he smiles, getting his face close to the screen. One note for anyone who thinks this sounds like too good a gig to be called work: there is never a real

24 • June 2014 • MN Valley Business

schedule. When the weather cooperates, it doesn’t matter if it’s a Sunday, you gotta get the work done when you can. Weddings often beckon on a Saturday night, when most folks expect to be kicking back. “My day can start at any time,” he explains, “it might even be with an idea in the middle of the night.” •••• A longtime photography fan wonders if the digital age has compromised the art of photography. Gregg answers without hesitation: “It’s [still] about the eye!” Even without a darkroom, he continues, “Everything I do gets manipulated. I still have to understand the light.” Does he ever shoot film anymore? “Occasionally. Some schools still teach film. It’s like vinyl is for recorded music aficionados.” But in reality, the computer is now the darkroom? “The process hasn’t changed, the tool has.” MV


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MN Valley Business • June 2014 • 25


Steve (left) and John Gag are the fourth generation to operate Gag Sheet Metal in New Ulm.

Four generations of service Gag Sheet Metal in its 110th year By Heidi Sampson Photos by John Cross

F

or 110 years, Gag Sheet Metal of New Ulm has been a family owned business founded by George Gag and a partner, whom he later bought out. George’s son, Melvin, carried on his father’s vision with one of his brothers, whom Melvin later bought out during their course of ownership. Melvin’s sons, Michael and Lauren Gag, became owners in 1978. Michael would also buy out his partner in later years. In 1986, Michael’s son, John Gag, would join the family business with John’s brother, Steve, following suit in the early 1990s. John and Steve would buy the business from their father around 1999.

“We are in our fourth generation, but every generation has bought out their brother,” John said. “Steve was an owner for 12 years but he is happy with what he does today.” Although John is the sole owner of Gag Sheet Metal, John and Steve still head up the management team. John specializes in roofing, as well as architectural panels, while Steve specializes in all things mechanically related to HVAC. In 2006, Gag Sheet Metal merged its two southern Minnesota offices, moving into a larger building with remodeled offices, as well as building a new shop and warehouse in New Ulm.

All In The Family

26 • may 2014 • MN Valley Business


Mike Pautzke works in the shop. Recently Gag was named a Bryant Factory Authorized Dealer. They have also received the Bryant Medal of Excellence in 2007 and 2008, earning status as one of the top 15 Bryant dealers in the country. MVB: How do you divide up your time and duties? John: It’s interesting, I’m technically the president or general manager but if its roofing orientated, that is where I’ve spent my first 28 years. Steve has been on the heating and cooling side the whole time. We’ve always helped each other out as needed. However, neither one of us has a clear job description either. We’ve always operated as a team effort. MVB: How many employees do you have? John: On payroll, we have 44 employees. It’s a handful. That’s divided between this location and the location in Gibbon, which is called Isakson and Gag Plumbing. On the south end of town, we bought Schanus Plumbing & Heating, which is now doing business as Schanus Gag Plumbing. Currently, we are operating under three names and two corporations. MVB: What is the best part about owning and running your own business? John: Steve and I got to come up through some pretty challenging and exciting times. We went from four or five employees to roughly 44 employees. I think the day-to-day challenges of running your own business is its own reward, as well as trying to grow the business. We certainly have some room for growth. MVB: How does weather affect your business? John: This past winter was difficult to get any production completed. I had work lined up but if you can’t get on a roof you can’t get on a roof. All those four letter words like, snow, rain, wind, and cold. They are all bad.

MVB: What is your radius of business? John: For the mechanical side, we don’t travel very far. We try to stay within two hours of our home base. I’d say 90 percent of that is within 30 miles. The mechanical side requires more service and we need to be close enough to take care of those customers. For the roofing side, there was a point two years ago where we had contracts in five different states at the same time. We have customers in Michigan, North Dakota, and South Dakota. MVB: Do you make your sheet metal in house? John: We are called Gag Sheet Metal and a lot people aren’t really sure what that means. The sheet metal we are involved with for the most part is the duct work for the heating and cooling jobs. We don’t fabricate our own. We do the smaller stuff and specialty fittings. The other sheet metal we do here is what we call architectural sheet metal. If you see a building and it has colored metal trim, we do that. For instance, on a commercial building there is always a cap where it terminates around the top of the roof. We used to fab everything ourselves but that is not how the industry works anymore. MVB: How do you handle the competition of these markets? John: On the roofing side, because of the nature of that business, there are fewer players and you don’t replace a roof as often. I can name my roofing competitors off the top of my head. On the mechanical side, there’s a lot of competition. People are breaking off all the time and starting their own business, especially on the residential side of things. We have a lot more competition from one guy in a truck. MVB: How does your business stand out? John: There are two things, longevity and customer service. This is our 110th year. When we enter into a relationship with a customer we want it to be a long-term relationship. Whether you know it or not, not every project will go perfectly. If something doesn’t go as intended, we are going to do what it takes to make the customer happy. I mean, that is the bottom line. We aren’t going to burn a relationship to make a buck. That is just not the way we do business. We will do whatever it takes to make our customers happy because we want to do their next project in 20 years. MV

MN Valley Business • may 2014 • 27


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28 • may 2014 • MN Valley Business


Construction/Real Estate Residential building permits Mankato 8000

(in thousands)

- 2013 - 2014

- 2013 - 2014 (in thousands)

3000

$2,392

6000

Residential building permits North Mankato

$3,693

$826

$1,262

2000

4000

1000

2000 0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

- 2013 - 2014 250

F

M

A

M

J

J

A

S

O

N

D

- 2013 - 2014 15

30

150

Includes single family homes attached and detached, and town homes and condos

Housing starts: Mankato/North Mankato 40

149 107

200

22

20

100

10

50 J

F

M

A

M

J

J

A

S

O

N

D

Source: Realtors Association of Southern Minnesota

20000 18000 16000 14000 12000 $2,865 10000 8000 6000 4000 2000 0 J F

(in thousands)

- 2013 - 2014

F

M

A

M

J

J

A

S

O

N

D

Commercial building permits North Mankato

- 2013 - 2014 (in thousands)

$6 $100

1500

$9,885

1000 500 M

A

M

J

J

A

S

O

N

D

— 2013 — 2014

5.5 5.0

3.5%

4.5 4.0 3.5

4.3% M

Source: Freddie Mac

0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

F

J

2000

Source: City of Mankato

J

0

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

3.0

J

Source: City of North Mankato

Existing home sales: Mankato region

0

0

A

M

J

J

A

S

O

N

D

Foreclosures: Third Quarter of 2013 County Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

2012

2013

Percent change

24 11 14 23 12 13 13 11 6

19 6 7 22 6 18 8 7 4

-21% -45% -50% -4% -50% +38% -38% -36% -33%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • may 2014 • 29


Agricultural Outlook

By Kent Thiesse

Farm land values being pressured downward

T

he Federal Reserve Bank of Kansas City, ag lenders, and university farm management analysts have been warning for the past couple of years that we could be headed for a farm land financial bubble, due to the very rapid increase in farm land values in recent years. There appears to be evidence that a reduction in average land values may be occurring in some regions based on recent land sales summaries. However, some land professionals indicate that land values have stabilized, and in isolated cases even increased, in portions of the Midwest since January, 2014, due to recent strengthening of cash corn and soybean prices. Record net farm income levels in recent years has led to major increases in land values in many areas during the past three years. There was a 13 percent increase in average farm land values from midyear 2012 to mid-year 2013, which followed a 14.5 percent increase year earlier. The year-to-year increases from 2012 to 2013 were the highest in the Midwestern and Plains States, with North Dakota recording a 41.5 percent increase, followed by South Dakota at 30.2 percent, Minnesota at 19.8 percent, Nebraska at 19 percent, and Iowa at 17.8 percent. Average farmland values have increased every year since 2000, except in 2009, with increases above 10 percent reported in each of the last three years. One of the best sources of farm real estate values in Minnesota is the U of M’s “Land Economics” web site: www.landeconomics.umn.edu. This web site is updated annually after September 30, and accesses a data base of various land values, based on farm land valuations reported to the state revenue office by county assessors offices throughout the state, which are adjusted annually based on actual land sales in a given county. Following are the average values per tillable acre for actual farm land sales for the past three years (20112013) in some selected south central

Minnesota counties, as well as the number of farm land sales in each of those years :

Farm land sales summary 2011

COUNTY Blue Earth Brown Faribault Le Sueur Martin Nicollet Waseca Watonwan

Number Average of Sales $$/Acre

31 28 35 28 22 27 20 21

$5,396 $6,345 $6,018 $5,661 $6,480 $6,534 $5,914 $6,630

Many times we hear discussions regarding the extreme high land sales that occur in a county or region, but we do not often focus on the average of land sales in that county or region. Based on the data there was a substantial increase in the average value per acre of farm land sold in most area counties in the past three years. Interestingly, the increases in the average land sale values were generally less from 2012 to 2013, as compared to 2011 to 2012. The average land sales values dropped slightly from 2012 to 2013 in both Martin and Le Sueur counties. It should be noted that 2013 featured a significantly reduced number of land sales in most counties compared to 2011 and 2012, which can result in individual land sales having a greater effect on average values. Blue Earth County had a 63 percent increase from 2011 to 2013 in the average value per tillable acre of farm land sold, followed by Nicollet County at 54 percent, Faribault and Waseca County at 40 percent, and Martin County at 37 percent. Lower increases in the average per acre values of land sales were reported in Brown County at 26 percent, Watonwan County at 23 percent, and Le Sueur County at 5

30 • may 2014 • MN Valley Business

2012

Number Average of Sales $$/Acre

45 50 61 34 47 16 35 31

$8,006 $7,533 $8,231 $6,249 $9,188 $8,438 $6,915 $7,674

2013

Number Average of Sales $$/Acre

32 $8,771 15 $7,984 13 $8,448 12 $5,955 16 $8,859 14 $10,065 11 $8,298 9 $8,178

percent. The average value per acre for farm land sold in 2013 ranged from just below $8,000 per acre to near $8,900 per acre in all but two counties. Nicollet County averaged just over $10,000 per acre for farm land sold in 2013, based on 14 land sales, and Le Sueur County averaged just under $6,000 per acre on 2013 farm land sales, based on 12 land sales. Private reports of land sales from portions of south central and southeast Minnesota in recent months have indicated some decline in average land values, generally 10 percent or less. The decline seems to be the greatest in areas that were impacted by the poor growing conditions and prevented planted crop acres in 2013, and on poorer quality farm land. Similar to 2013, the volume of land sales early in 2014 seems to be greatly reduced from previous years. The moderation in commodity prices, along with the potential for increases in ag real estate interest rates, will likely continue to put downward pressure on land values. Some farm management analysts have suggested that a combination of these factors could result in average land values dropping by as much as


Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2013 — 2014 8 6

— 2013 — 2014 20

$14.70

8

$4.37

4

J

F

Source: USDA

M

A

M

J

J

A

Iowa-Minnesota hog prices

108

S

O

N

D

0

J

F

Source: USDA

M

A

M

J

Milk prices

185 pound carcass, negotiated price, weighted average

— 2013 — 2014 120

22

$109.88

J

A

S

O

N

D

Minimum prices, class 1 milk Dollars per hundredweight

— 2013 — 2014 24

96

$22.45

20

84

18

$90.57

72 60

$15.24

12

4

0

(dollars per bushel)

16

$6.91

2

Soybean prices — southern Minnesota

$19.46

16

J

F

M

A

M

J

J

A

S

O

Source: USDA

N

D

14

J

F

M

A

M

J

J

A

S

O

N

D

Source: USDA. Based on federal milk orders.

Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

one-third from the highest levels in the next few years. As we have seen in the past couple of months, any enhancement of corn and soybean prices tends to stabilize average land values fairly quickly. Profitability in the livestock sector is also likely to be much stronger in the next couple of years, which could also be a positive factor for land values. On the negative side, overall net farm incomes for 2014 and 2015 are likely to be reduced from the recent high levels, and most analysts expect long-term interest rates to

C. Sankey

start rising in the next couple of years. The continued limited volume of land sales should help maintain strong demand for Midwest farm land during the next 6-12 months.

MV

Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

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507-386-0404 Mon.-Fri. 8am-5pm www.freybergpetroleum.com

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BUSINESS BANKING www.minnstarbank.com Member FDIC

MN Valley Business • may 2014 • 31


Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major April Industry ‘13 ‘14 Construction Manufacturing Retail Services Total*

226 206 55 194 681

Percent change ‘13-’14

176 132 38 170 516

-22% -36% -31% -12.4% -24.2%

Major Industry

April

Construction Manufacturing Retail Services Total*

‘13

‘14

Percent change ‘13-’14

3,773 2,982 1,438 5,729 13,922

3,379 2,058 1,217 5,102 11,756

-10% -31% -15% -11% -15.6%

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Local non-farm jobs

Minnesota Local non-farm jobs

- 2013 - 2014

Nine-county Mankato region 123,416 124,885

30000

(in thousands)

2000

10000

1000

00000

J

F

M

A

M

J

J

A

S

Local number of unemployed

O

N

D

- 2013 - 2014

Nine-county Mankato region 7,761 7,355

10000

0

J

F

M

A

M

J

J

A

S

Minnesota number of unemployed

O

N

D

- 2013 - 2014

172,040

200000

8000

133,805

150000

6000

100000

4000

50000

2000 0

2,787.7 2,844.1

3000

20000

- 2013 - 2014

J

F

M

A

M

J

J

A

S

O

N

D

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

2013

2014

4.5% 55,529 2,629

4.2% 56,881 2,472

Source: Minnesota Department of Employment and Economic Development

32 • may 2014 • MN Valley Business

J

F

M

A

M

J

J

A

S

O

N

D

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) April

0

County/area Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

April 2013 4.7% 6.1% 6.9% 8.6% 5.8% 4.2% 6.2% 6.9% 6.7% 5.3% 5.7% 7.6%

April 2014 4.3% 6.1% 7.3% 8.3% 5.7% 4.0% 5.9% 6.4% 6.8% 4.9% 4.5% 5.9% C. Sankey


Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2013 - 2014

684

1200

- 2013 - 2014 $332.2 $383

400

800

300

600

200

400

100

200 0

(In thousands)

500

739

1000

J

F

M

A

M

J

Source: Sales tax figures, City of Mankato

J

A

S

O

N

D

Lodging tax collections Mankato/North Mankato

0

J

F

M

40000

$29,345

J

A

S

O

N

D

- 2013 - 2014

68000 51000

30000

34000

20000

17000

10000 J

F

M

A

M

J

J

A

S

O

N

0

D

Source: City of Mankato

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

Gas prices-Mankato — 2013 — 2014

5

J

$48,903 $81,410

85000

$27,680

M

Mankato food and beverage tax

60000 50000

A

Source: Sales tax figures, City of Mankato

- 2013 - 2014

0

Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato

Stocks of local interest

April 14

May 15

Percent change

Archer Daniels

$44.23

$43.89

-1

4

Ameriprise

$101.93

$108.51

+6.5

3

Best Buy

$24.46

$25.29

+3.4

Crown Cork & Seal

$44.93

$48.34

+7.6

Fastenal

$49.85

$12.16

+3.6

General Growth

$23.38

$47.72

-4.3

General Mills

$51.35

$23.48

+0.4

Eventis

$11.80

$53.55

+4.3

Hutchinson Technology

$2.76

$2.16

-22

Itron

$33.74

$37.89

+12.3

Johnson Outdoors

$22.65

$24.03

+6.1

3M

$132.83

$140.45

+5.8

Target

$59.49

$58.40

-2

U.S. Bancorp

$40.47

$40.71

+1

Wells Financial

$23.25

$25.00

+7.5

$.57

$0.65

+14

$13.16

$30.48

-2.2

$4.29

$3.50

2 1 0

J

F

M

A

M

J

J

A

S

O

N

D

Gas prices-Minnesota — 2013 — 2014

5

$4.27

4 3 $3.46

2 1 0

J

F

M

A

M

J

J

A

S

O

N

D

Winland Xcel

Source: GasBuddy.com C. Sankey

MN Valley Business • may 2014 • 33


Advancing Business for a Stronger Community

GREATER MINNESOTA

GREATER LIVABILITY Greater Mankato Growth

WHY PEOPLE CHOOSE TO LIVE IN GREATER MINNESOTA WHEN THE TREND SEEMS TO SIGNAL POPULATION SHIFTS TO LARGE METRO AREAS

When you think livable areas in Minnesota, do you think outside the Minneapolis - St. Paul Metropolitan Statistical Area (MSA)? Greater Minnesota

regions are working hard to make sure you know just how livable their communities are,

34 June 2014 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

when often communities outside the Twin Cities are overshadowed by the MSA’s large footprint. Greater Mankato in particular is gaining momentum as an attractive place to live. In 2013 the Mankato – North Mankato MSA, which includes Blue Earth and Nicollet counties, gained 500 people in 2013 alone.


priority for many businesses, especially those in the manufacturing industry.

According to the state demographers office, the Mankato-North Mankato MSA labor force is projected to grow in several important areas. The 15-24 year-old group (the “talent pipeline”) is expected to grow by 30% from 2015 to 2030. While the nation has growing concerns around the supply of “experienced peak performers” (45-64 year-olds), projected at only 5.4% growth over the next 25 years, our MSA is projected to have 15.5% growth over the same time period (see chart below). Some key components that make the Mankato – North Mankato MSA attractive include livability, cost of living, jobs and educational opportunities. LIVABILITY Many studies indicate that the top factor people look for when deciding to relocate is the quality of life offered. From a short commute time (12 minute average) to availability of outdoor recreation, Greater Mankato has diverse and desirable attributes. The region also offers access to nationally recognized healthcare and top notch K-12 education.

Greater Mankato Growth is also committed to continuing education for business leaders. Through the more than 30 year-old Greater Mankato Leadership Institute and the Greater Mankato Young Professionals group, GMG strives to retain and train the workforce and ensure they have the resources they need to be successful. WHAT WE DO Greater Mankato Growth is a business development organization. Being a unique and combined chamber of commerce and economic development non-profit, they serve as a catalyst and convener for existing businesses and potential new business. GMG markets the community, gathers input from the business community and provides them with resources and/or connections to make everyone successful. GMG strives to ensure that the business community is able to position and properly represent the region so that those who may have not visited or heard of the region know the advantages of living here without having to travel. The Way to Grow, a community positioning video, was released in March by Greater Mankato Growth. The video is a great tool for employers, educators, businesses and public entities alike to show what it’s like to live, work and do business in Greater Mankato.View the video online at: greatermankato.com/ way-to-grow.

JOBS According to Current Employment Statistics (CES) figures from the Minnesota Department of Employment and Economic Development, Greater Mankato’s businesses keep adding jobs. In Q1 of 2014, the region saw record high private sector and private service providing (a subset of the private sector) job growth. Greater Mankato Growth continues to hear that employers tend to struggle to find talent to fill their job openings. Resolving this issue tends to be a top

MN Valley Business • June 2014 • 35

Greater Mankato Growth

COST OF LIVING It is likely no surprise for those living and doing business in Greater Mankato that the costs are below the national average, which allows people to do more with less. According to Moody’s Analytics, cost of living in the MSA is 73% of the national average and cost of doing business comes in at 89% of the national average. In Greater Mankato housing costs 19% less, utilities cost 1.5% less and groceries cost an average of 2% less compared to the national average (according to COLI).

EDUCATIONAL OPPORTUNITIES What makes our marketplace unique is the five higher education institutions in the area. Also, the region’s K-12 schools are among the best in the nation, with innovative educators partnering with businesses and organizations to ensure students are well-prepared to meet the needs of employers and as a result, achieve success for themselves.


Songs on the Lawn Join us every Thursday this month from 11 am - 1 pm for Songs on the Lawn presented by Xcel Energy. The event takes place in front of the Mankato Intergovernmental Center (10 Civic Center Plaza) and features music from local artists as well as food from area restaurants and activities for children! Learn more at greatermankato.com/songs-lawn. MUSICAL LINEUP: June 5: String Theory June 12: Ben Marti Trio June 19: Organic Cowboys June 26: The Last Revel

Greater Mankato Growth

Sign Up to Tee Off Take part in the annual Greater Mankato on the Green Monday, July 14. All Greater Mankato Growth members at the Engaged Level or higher are welcome to golf in either the 9 or 18-hole tournaments. There will be a continental breakfast provided for the morning, 9-hole golfers a lunch and awards ceremony for all golfers and dinner provided for the afternoon, 18-hole golfers. The tournaments fill up fast - make sure to register your team soon! A variety of sponsorships are avaiable for each of these tournaments. If you are interested in sponsoring this event, please visit greatermankato.com/ greater-mankato-green.

36 June 2014 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

2


Growth in Greater Mankato NEW BUSINESS

NEW LOCATION

NEW BUSINESS

Mankato Career Solutions Sam & Abe’s Childcare Learning & 515 North Riverfront Drive, Suite 115, Development Center Mankato 160 Street, Andrews Court, Suite 100, Mankato

VSI 211 Mohr Drive, Suite 100, Mankato

2014 Business After & Before Hours

5:00 - 7:00 p.m. June 3 July 1 August 5

Bolton & Menk, Inc. Pioneer Bank Thomas Tree & Landscape

2014 Business After Hours Sponsored by:

June 18 July 16 August 20

Willow Brook Senior Cooperative Hilton Garden Inn Jake’s Stadium Pizza

2014 Business Before Hours Sponsored by:

April Business Before Hours hosted by Enventis

Business After and Business Before Hours gives representatives from GMG member businesses at the Engaged Level or higher an opportunity to get together with one another to exchange ideas and learn about each other’s businesses. For more information on these and other member events, visit greatermankato.com/events.

MN Valley Business • June 2014 • 37

Greater Mankato Growth

April Business After Hours hosted by The Loose Moose Saloon & Conference Center

7:30 - 9:00 a.m.


COMMUTING PATTERNS

Guiding Through greatermankato.com

resources available on Greater Mankato Growth’s website, greatermankato.com

This is the first article in a series that is designed to help you and your business navigate through the Greater Mankato Growth website, greatermankato.com, utilize the tools we provide and learn the benefit of these tools.The first in this series is concentrated on commuting patterns or drive time information and how you as a business can use this tool to it’s full effect. Learning more about commuting patterns of people within the marketplace is valuable for many types of businesses. We highlighted a couple of ways this resource can help your business and the marketplace: • Evaluating talent needs of your business. A potential employee might commute 30 minutes for the desired position. What means of advertising and in what communities would your business want to market the position? Within 30 minutes of Mankato-North Mankato, the population is 116,454. However, it jumps to 193,912 going 45 minutes out. That’s an increase of nearly 67% of potential employees. • Educating supply chain partners about the immediate marketplace that your business is in. • Recruitment of businesses into the area by using statistics such as: within 45 minutes of Mankato, 51% of households make more than $50,000. • Assessing criteria for locating a business and deciphering what criteria is of importance. The proximity to Minneapolis-Saint Paul, proximity to industry competitors, quantity of available workforce, or consumer spending patterns in the region.

greatermankato.com/ commuting-patterns

Greater Mankato Growth

Cavalier Calls on theNewest Greater Mankato Growth Members

A&E Construction Supply 54090 Loren Drive, Mankato plowandtrencher.com

Ignition Fitness & Sports 100 Sibley Parkway, Mankato ignitionmankato.com

38 June 2014 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

Ideal Weigh To B Health & Weight Loss Clinic, Inc. 315 South Main Street, Mankato idealweightob.com

RiverRidge Chiropractic 320 Stadium Road, Suite 300, Mankato RiverRidge-Chiropractic.com


com

mankato.com

Visit Mankato Has a lot to Celebrate As a special part of the 31st annual National Travel and Tourism Week held nationwide May 3 - 11,Visit Mankato recognized five outstanding ambassadors of Mankato for making our visitors feel welcome.

o.com/ terns

mbers

The award winners were honored at the Visit Mankato 30th Anniversary Celebration on May 8 at the Mankato Place Mall.Visit Mankato celebrated 30 years of promoting Mankato as an ideal destination for conventions, tournaments and leisure travel.

Julie Brewer,Visitor Experience Manager of the Monica Stephanie, the General Manager Children’s Museum of Southern Minnesota, was of Microtel Inn & Suites by Wyndham was awarded the Attraction Travel and Tourism Award. awarded the Hotel Travel and Tourism Award.

NEW LOCATION

For more information about Mankato as a travel destination, visit visitmankatomn. com. Inc. JoRae Galli Storm (pictured with husband Jason), the owner of Dairy Queen West and The Pita Pit, was awarded the Restaurant Travel and Tourism Award.

During Visit Mankato’s 30th Anniversary Celebration on Thursday, May 8, Anna Thill, President of Visit Mankato, announced “ Now Playing You.” Create a video about why Mankato is the great place to visit. The first eligible video to reach 100,000 views on YouTube will receive a $2500 check from Visit Mankato. Find out more at visitmankatomn.com Visit Mankato is an affiliate of Greater Mankato Growth (GMG), operated as an LLC under GMG.Visit Mankato is dedicated to the important work of attracting and servicing visitors, conventions, events and tournaments in Greater Mankato.

MN Valley Business • June 2014 • 39

Greater Mankato Growth

Terry and Karen Johnson of Scheel’s were awarded the Retail Travel and Tourism Award.


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Mnvalley 6 14