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August 2026 • VOL. 43 No. 4

A modern office building gets a second act in St. Paul By Dan Rafter, Editor

evelopers are increasingly transforming struggling office space into multifamily developments. And usually, developers target offices with old bones for this process. Think vintage office towers, historic masonry facades and obsolete floor plans from the 1920s and 1930s. Developers view these buildings as natural fits for multifamily conversions because of the history behind the properties and the often stunning architecture that they boast.

Photos of Landmark Tower in downtown St. Paul courtesy of BKV Group.

That doesn’t mean, though, that only vintage office buildings are good targets for multifamily conversion. In fact, the next wave of these conversions might focus on office buildings built in more modern times. Think the more utilitarian but still functional office towers of the ‘80s and ‘90s. Landmark Tower in downtown St. Paul, Minnesota, is a good example. Built in 1983 as the 25-story Amhoist Tower, the modernist office building spent decades as a fixture

of the St. Paul skyline. But as office demand changed and COVID-19 pandemic fueled the rise of work-from-from and hybrid in-office schedules, the Amhoist Tower saw its vacancy rate skyrocket. But today? The building at 345 St. Peter St. is enjoying new life as a modern multifamily property. Working with developer Sherman Associates, BKV Group developed a plan to convert most of the tower into 187 apartments. The Office to page 24

Continuing to bet on the Minneapolis-area industrial market

By Dan Rafter, Editor

he industrial development boom in the northern Twin Cities is showing little sign of slowing, and Oppidan Investment Company is betting that businesses will continue to need flexible space in one of the metro’s fastest-growing corridors. The Excelsior, Minnesota-based developer has broken ground on Rogers Gateway, a 117,000-square-foot speculative industrial project in Rogers, Minnesota. The roughly $15 million development is scheduled for completion in November 2026.

Oppidan is developing the project without a tenant in place, a strategy that gives prospective users an opportunity to shape the space around their operations. Rogers Gateway is designed to serve a broad range of industrial users, including companies needing warehouse and distribution space as well as manufacturers and businesses looking for showroom and office components. Location is one of the project’s biggest selling points.

“The Minneapolis-area industrial market remains strong, with continued demand for new construction in well-located areas,” said Ryan Durand, developer with Oppidan. “We are seeing particular interest in projects that offer strong highway access, visibility and flexibility for a variety of industrial users.” Rogers Gateway will have direct visibility and access from Interstate 94, putting tenants along a major east-west transportation route through the Twin Cities. The site also Industrial to page 30

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CONTENTS

A modern office building gets a second act in St. Paul:

Developers are increasingly transforming struggling office space into multifamily developments.

Continuing to bet on the Minneapolis-area industrial market:

The industrial development boom in the northern Twin Cities is showing little sign of slowing, and Oppidan Investment Company is betting that businesses will continue to need flexible space in one of the metro’s fastest-growing corridors.

Long-term outlook for healthcare real estate remains strong, despite uncertainty:

The optimism that shaped the healthcare real estate sector at the start of 2026 has given way to a more cautious, selective market at the halfway point, according to a mid-year update from Davis, a national healthcare real estate firm based in Minneapolis.

The Cost of Trying to Fix a Failed 1031 Exchange:

Section 1031 can be one of the most powerful tax-deferral tools available to real estate investors. When used properly, it allows an investor to sell appreciated real estate, reinvest in qualifying replacement property, and defer recognition of capital gain.

The Midwest office market? Its momentum took a hit during the second quarter:

Momentum for the Midwest office market, including in the Minneapolis-St. Paul region? It slowed a bit in the second quarter, according to the latest research from Newmark.

August 2026

10 On the edge of the next growth cycle for industrial real estate?:

For much of the last two years, the nation’s industrial real estate market has seen the same story: Developers built warehouses at a blistering pace while tenants struggled to keep up.

12 U.S. office market gaining momentum, but not all properties are seeing equal demand:

For years, the U.S. office market has been waiting for a sign that the worst was over. It might have one in the latest research from Newmark.

14 How AI is changing the day-to-day work of industrial real estate acquisitions:

There is a version of commercial real estate acquisitions work that most people outside the industry never see: the hours spent pulling deal details, formatting data, and building presentation materials before any real analysis can happen.

14 What Affordable Housing Lenders Look for That Developers Don’t Always See:

If you’ve ever submitted a financing package for an affordable housing project and wondered what happens next, you’re not alone.

14 Outdated office buildings in Minneapolis-St. Paul?

They’re finding new life as apartments, industrial facilities:

Office buildings across the Minneapolis-St. Paul market continue to find new life as apartments, industrial facilities and other uses, according to the latest research from Newmark.

Minnesota Real Estate Journal Copyright © 2026 by the Minnesota Real Estate Journal is published bi-monthly for $85 a year. 7767 Elm Creek Boulevard, Suite 210, Maple Grove, MN 55369. jeff.johnson@rejournals.com. For more commercial real estate news and information, please visit our website www.rejournals.com ©2026 Real Estate Publishing Corporation. No part of this publication may be reproduced without the written permission of the publisher.

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August 2026

Long-term outlook for healthcare real estate remains strong, despite uncertainty President | Publisher Jeff Johnson jeff.johnson@rejournals.com

By Davis

Managing Editor Dan Rafter drafter@rejournals.com Senior Vice President Jay Kodytek jay.kodytek@rejournals.com Chief Financial Officer Todd Phillips todd.phillips@rejournals.com Art Director | Graphic Designer Alan Davis alan.davis@rejournals.com Media & Design Manager Jordan Jensen jordan.jensen@rejournals.com Managing Director National Events & Marketing Kaitlyn LaCroix kaitlyn.lacroix@rejournals.com

7767 Elm Creek Boulevard, Suite 210 Maple Grove, MN 55369

Image courtesy of Davis.

he optimism that shaped the healthcare real estate (HRE) sector at the start of 2026 has given way to a more cautious, selective market at the halfway point, according to a midyear update from Davis, a national healthcare real estate firm based in Minneapolis. Persistent interest rate volatility, disappointing inflation data and geopolitical shocks — including the conflict in Iran and uncertainty surrounding the Strait of Hormuz — have stalled the anticipated rate cuts that many investors had built into their 2026 plans, even as underlying demand for healthcare space remains strong. “Coming into the year, we expected enough clarity on rates to be aggressive in capital deployment,” said Stewart Davis, Executive Vice President, Davis. “That window hasn’t materialized the way we hoped. Rates continue to creep up day to day, which makes it very difficult to confidently underwrite a deal today when things could change with a closing 60 to 90 days out. As a result, Davis predicts that their 2026 acquisition projections could be lower by as much as 25%. Rate Unpredictability Reshapes Underwriting Interest rate volatility has become the defining challenge of the year’s second half. Davis pointed to swings of several basis points within a matter of days as evidence of how unstable the debt markets have become, a dynamic that leaves little room for error on deals with extended closing timelines. To illustrate the risk facing pipeline deals across the sector, Davis recalled a 2022 acquisition opportunity in Alaska. A construction delay pushed the closing date out and during that delay, rates rose nearly 200 basis points. The potential for a repeat of that type of scenario reinforces the need for discipline.

“A deal that looks profitable today can turn upside down if rates move against you before closing,” Davis said. “Even larger, well-capitalized groups that can buy all-cash and refinance later are likely to underwrite more conservatively.” A Regional Divide: Sunbelt Premiums vs. Upper Midwest Value Regional pricing has diverged sharply in 2026. In high-growth Sunbelt markets — including Arizona, the Carolinas, Nevada, Texas and Florida — well-capitalized buyers are paying cash and, in Davis’s view, often overpaying based on favorable demographic and tax trends. At the same time, some larger REITs and private equity groups have pulled back from Minnesota and the broader Upper Midwest amid perceptions about the state’s political environment. The retreat has left Davis, based in Minneapolis, with a smaller pool of competitors and comparably better pricing in its home market. “It’s created an interesting dynamic,” Davis said. “We’re seeing groups overpay in markets that look attractive on paper, while a market like Minnesota, which we know extremely well, is being overlooked for reasons that have nothing to do with the underlying real estate fundamentals.” Construction Costs and Labor Shortages Curb New Development The economics of development have grown more difficult since the start of the year because of costs, lead times and labor. Shell construction costs for Class “A” MOBs, which don’t include tenant improvements, now average approximately $250 per square foot from roughly $150 per square foot in 2019. Lead times for critical components such as electrical switch gear can now stretch up to 18 months. Moving forward, an aging, largely unreplaced skilled trade workforce, particularly in sub-specialties like brick masonry, Davis to page 22

August 2026

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August 2026

The Cost of Trying to Fix a Failed 1031 Exchange By Jeff Peterson, J.D., Commercial Partners Exchange Company, LLC

iStock photo, credit Alexander Sikov.

ection 1031 can be one of the most powerful tax-deferral tools available to real estate investors. When used properly, it allows an investor to sell appreciated real estate, reinvest in qualifying replacement property, and defer recognition of capital gain. But 1031 exchanges are deadline driven. The rules are technical, and the timelines

are unforgiving. Few cases make that point more clearly than Dobrich v. Commissioner. At its core, Dobrich is about a missed 45-day identification deadline. But the case is remembered because of what happened after the deadline had passed. The taxpayers tried to create a paper trail showing that replacement properties had been identified on time. The Tax Court reject-

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ed that effort. The result was a taxable sale, a 75% civil fraud penalty on the amount of unpaid tax, and a case that remains a powerful warning for investors and advisors. The lesson is simple: if a 45-day deadline is missed, the exchange may be lost. But if documents are backdated or falsified to cover up 1031 to page 7

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August 2026

required timeframe. Those documents were later used in connection with the tax return the missed deadline, the problem becomes and provided to the IRS during audit. much bigger than a failed exchange. That conduct turned a failed exchange into a fraud case. The Case in Brief 1031 from page 6

David and Naomi Dobrich owned appreciated real estate in Antioch, California. In 1989, they sold a portion of that property and attempted to treat the transaction as a deferred Section 1031 exchange. Because the sale closed on August 22, 1989, the 45-day identification period ended on October 6, 1989. During that 45-day period, the Dobrichs considered several possible replacement properties. A letter prepared during the window identified multiple potential replacement properties. However, the two properties they ultimately acquired, one in Pleasant Hill, California, and one known as Skyland in Nevada, were not on that list. That became the central issue. The Tax Court found that Pleasant Hill and Skyland were not properly identified within the 45-day period. The court also found that the taxpayers did not begin pursuing those properties until after the identification deadline had expired. Instead of accepting that the exchange had failed, the taxpayers attempted to build a record after the fact. The court found that letters and purchase documents were backdated to make it appear as though the replacement properties had been identified within the

What the Court Held The Tax Court rejected the taxpayers’ argument that the replacement properties had been identified informally or privately during the 45-day period. The court was not willing to treat private discussions between spouses as a valid identification of replacement property. If that were allowed, the identification requirement would have little practical meaning. A taxpayer could simply claim, after the fact, that a property had been discussed before the deadline. The court held that the Pleasant Hill and Skyland properties were not timely identified. As a result, the gain from the sale of the Antioch property had to be recognized. The court also rejected the taxpayers’ attempt to defer the gain into a later year under the installment-sale rules. Based on the facts, the court concluded that the taxpayers had not been sufficiently restricted from using or benefiting from the sale proceeds. In other words, the exchange paperwork did not overcome the practical reality of the transaction. The 75% fraud penalty was the most serious part of the case.

The court focused on the false and backdated documents. It concluded that the taxpayers knew the 45-day identification requirement mattered, knew the properties had not been properly identified, and still participated in creating false documents designed to make it appear otherwise. The financial result was severe. The taxpayers not only lost the intended Section 1031 deferral, they also faced a substantial income tax deficiency and a significant civil fraud penalty. What began as a failed exchange became far more costly because the taxpayers attempted to support the transaction with false and backdated documents. It was an expensive lesson. What This Means for Investors For investors, Dobrich reinforces a point that cannot be overstated: the 45-day identification deadline is real. In a delayed 1031 exchange, replacement property generally must be identified within 45 days after the relinquished property is transferred. The replacement property must then be received within 180 days, or by the due date of the taxpayer’s return, including extensions, whichever is earlier. Under current rules, the identification must generally be made in writing, signed by the taxpayer, and delivered to the appropriate party within the identification period, unless 1031 to page 20

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August 2026

The Midwest office market? Its momentum took a hit during the second quarter by Dan Rafter, Editor

omentum for the Midwest office market, including in the Minneapolis-St. Paul region? It slowed a bit in the second quarter, according to the latest research from Newmark. According to Newmark, the Midwest office market posted its weakest quarter of net absorption in a year, with tenants giving back 622,000 square feet of office space. The result of this? Year-to-date absorption reached negative 1.16 million square feet in the Midwest office sector, a significant change from the positive 1.46 million square feet recorded here during the same period a year earlier. But there is an important factor to keep in mind: The Midwest’s office inventory continues to shrink thanks to conversions. That is helping to keep vacancy rates in this sector from climbing even higher. That is one of the key takeaways from Newmark’s Second Quarter 2026 Midwest Office Market Conditions & Trends report. The report found that the region’s total office inventory fell to 763.9 million square feet in the second quarter, down 2.1 million square feet from the first quarter and 17.5 million square feet, or 2.2%, from a year earlier. Conversions and demolitions are removing obsolete office buildings from the market much faster than new construction is adding space. Without those removals, Newmark said, the regional vacancy rate would have reached a record high. Instead, vacancy held steady at 22.1%, essentially unchanged from the first quarter and only 20 basis points higher than a year ago. Minneapolis bucks the trend In good news for the office market in the Twin Cities, though, the Minneapolis-St. Paul area ranked as one of the brighter spots in the Midwest during the second quarter. The market recorded positive net absorption of nearly 112,000 square feet in the second quarter, according to Newmark’s data. That put Minneapolis among the markets posting gains while several other major

iStock photo, credit Elijah-Lovkoff.

Midwest markets struggled with substantial occupancy losses. Minneapolis also remained one of the region’s most expensive office markets. Average direct asking rents reached $30.36 a square foot, second only to Chicago’s $35.57. Those Minneapolis rents helped push the region’s overall direct asking rate to $28.76 a square foot. Even though the regional average slipped 0.8% from the first quarter, it remained 4.3% above the second quarter of 2025. The Minneapolis market also recorded one of the Midwest’s larger office investment sales during the quarter. A 328,149-squarefoot property at 3701 Wayzata Blvd. traded for $34 million, or $104 a square foot. And Soo Line Railroad Company signed a new 40,850-square-foot lease at 120 S. 6th St. in Minneapolis in June. That activity doesn’t mean the Twin Cities office market has escaped the broader pressures facing the sector. But compared with the sharp occupancy losses recorded in several other Midwest markets, Minneapolis entered the second half of 2026 with far more momentum. Chicago provides another bright spot Chicago was the other major Midwest market to post a meaningful gain in the second quarter. Tenants in this market absorbed 522,000 square feet, helping offset some of the steep losses elsewhere in the region. Kansas City added another 314,000 square feet. Together, those two markets recorded 836,000 square feet of positive absorption, largely because existing tenants expanded. The picture looked different in Cleveland, Indianapolis and Detroit. Cleveland alone recorded a 666,000-square-foot occupancy loss, while Indianapolis shed 399,000 square feet and Detroit lost 291,000 square feet. St. Louis contributed another 230,000-square-foot loss. Combined, those four markets accounted for 1.59 million square feet of move-outs during the quarter.

Cleveland’s negative results were largely because Progressive Insurance exited its owner-occupied building, Newmark reported. Fewer tenants, fewer buildings The second-quarter numbers illustrate just how much the Midwest office market is changing. Office tenants are still vacating office space. But landlords, developers and investors are also removing some of that space from the competitive inventory through conversions and demolitions. The Midwest region delivered just 39,500 square feet of new office space during the second quarter. At the same time, 2.1 million square feet disappeared from the inventory, largely thanks to conversions. That helped prevent the office vacancy rate in the Midwest from rising more sharply. Sublease space, meanwhile, is becoming less of a concern than it was during earlier stages of the office downturn. Newmark counted 15.3 million square feet of available sublease space, equal to 2% of the region’s rentable inventory and just 9.1% of all vacant space. Milwaukee and Chicago carried the largest sublease exposure, at 2.9% and 2.5% of inventory, respectively. Kansas City and St. Louis had much less, at 0.8% and 1%. The three largest office sales in the Midwest all occurred in Chicago and totaled $293.5 million across 3.5 million square feet, an average of just $84 a square foot. That is a long way from the pricing that office buildings commanded before the pandemic. And for now, Newmark’s second-quarter numbers suggest that the Midwest office market’s recovery remains uneven. Some markets are beginning to post positive absorption and attract new leasing activity. Others are still coping with large blocks of space being returned to the market.

August 2026

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August 2026

On the edge of the next growth cycle for industrial real estate? By Dan Rafter, Editor

or much of the last two years, the nation’s industrial real estate market has seen the same story: Developers built warehouses at a blistering pace while tenants struggled to keep up. That is beginning to change. According to Colliers’ second-quarter 2026 U.S. Industrial Outlook, the national industrial sector is showing its strongest signs yet that the post-construction-boom adjustment is nearing an end. Occupier demand is once again outpacing new supply, vacancy has started to edge lower and the fundamentals are lining up for what Colliers says could be the beginning of the next growth cycle for industrial real estate. Perhaps the biggest milestone came in the second quarter, when net absorption reached nearly 59 million square feet, beating the 53.4 million square feet of new industrial space delivered during the quarter. According to Colliers, it’s the first time since the construction surge began several years ago that tenant demand has exceeded new supply. That shift is significant because it suggests that the industrial sector is working through the wave of speculative development that flooded many markets during 2023 and 2024. In its report, Colliers said that this improving balance also helped lower the national industrial vacancy rate to 7.3%, down seven basis points from the first quarter. While vacancy remains slightly higher than it was one

iStock photo, credit urfinguss.

year ago, Colliers said that annual increases in industrial vacancy rates have slowed, and nearly two-thirds of the markets the company tracks either stabilized or posted lower vacancy during the second quarter. The Midwest continues to stand out as one of the healthiest industrial regions in the country. Colliers reported that the region maintained the nation’s lowest vacancy rate at 5.4%, benefiting from slower development activity and a stronger balance between supply and demand than many coastal markets. The Midwest recorded more than 13 million square feet of net absorption during the year’s second quarter while adding about 12 million square feet of new industrial space. Nationally, the South saw the most industrial activity in the second quarter, accounting for roughly half of all net absorption recorded across the country. Houston led the nation with 7.5 million square feet of absorption, followed by Dallas-Fort Worth, Atlanta, Los Angeles and Phoenix. Manufacturing users, third-party logistics firms, retailers, food and beverage companies and businesses tied to data center development all contributed to healthy leasing activity. This doesn’t mean that the industrial sector is in the middle of a new boom period. New deliveries have slowed considerably from the peak of the building cycle following the start of the COVID-19 pandemic. Colliers reported that new industrial deliveries reached their lowest quarterly total since 2016.

At the same time, the construction pipeline has begun expanding again, climbing to more than 314 million square feet. Colliers said that this reflects growing confidence from developers in the market but not a return to the aggressive speculative construction seen several years ago. Higher construction costs, tighter lending standards and longer development timelines are expected to keep new projects more selective. Rental rates continue to tell a more mixed story. Average warehouse and distribution asking rents slipped 1.6% on a year-over-year basis to $10.36 a square foot nationally as landlords in overbuilt coastal markets continued adjusting pricing. Colliers said that newer industrial buildings with modern features continue to command premium rents, while tighter Midwest markets and select Southern markets have maintained stronger pricing power. Looking ahead, Colliers predicted that industrial demand will remain healthy through the rest of 2026. As more companies move forward with expansion plans that they had delayed because of higher borrowing costs and economic uncertainty, demand should continue matching or exceeding new deliveries. If that trend holds, vacancy should gradually decline while laying the foundation for a more balanced and sustainable industrial market entering the next phase of the real estate cycle.

August 2026

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August 2026

U.S. office market gaining momentum, but not all properties are seeing equal demand By Dan Rafter, Editor

Image by donterase from Pixabay.

or years, the U.S. office market has been waiting for a sign that the worst was over. It might have one in the latest research from Newmark. The national office market posted another quarter of positive demand in the second quarter, vacancy continued to fall and new construction remained near historic lows. At the same time, tenants are signing leases, especially in the best buildings, according to Newmark’s second-quarter U.S. Office Market Conditions & Trends report. But not everything in the report was positive. The big challenge for this sector? The office recovery is becoming increasingly divided between the properties tenants want and the ones they don’t. That is the big takeaway from Newmark’s recently released trends report. The national U.S. office market recorded nearly 8.8 million square feet of net absorption during the second quarter, marking the fourth consecutive quarter of positive demand. The vacancy numbers are encouraging, too. Newmark reported that the national office vacancy fell to 19.9% in the second quarter, down 60 basis points from a year earlier and below the 20.5% peak reached in the second quarter of 2025. But don’t mistake that improvement for a return to the old office market. The big difference? Today’s tenants are choosier. Class-A buildings continue to dominate the leasing conversation. Four- and five-star properties accounted for 49% of all new leasing activity during the quarter even though

they represent just 34% of total office inventory. Newmark says Class-A leasing as a percentage of inventory continues to rise. That flight to quality is one of the defining stories of the current office market. Companies that are bringing employees back to the office want to give them a reason to be there. That makes newer, better-located and amenity-rich buildings considerably easier to lease than older commodity space. The numbers bear that out. Newmark estimates that just over 53 million square feet of office space was newly leased in the second quarter. That’s up 9.1% from the same period a year earlier, but still about 30% below the 2018-2019 average. The bottom line? The U.S. office market is getting healthier. It just isn’t healthy enough yet. In its report, Newmark estimated that about 42% of pre-pandemic office leases have not yet expired. That represents 869 million square feet of space scheduled for renewal before the end of 2027. Average lease sizes have already declined 13.4% from pre-pandemic levels. Still, there is reason for landlords to feel better about those upcoming expirations. Newmark’s tenants-in-the-market data shows that 78% of companies plan to maintain or expand their footprints when their leases expire. And the recovery isn’t confined to the biggest gateway markets. Secondary and tertiary markets accounted for nearly 80% of second-quarter absorption. Philadelphia led the nation with 1.3 million square feet of ab-

sorption, while Nashville posted about 1 million square feet. Technology-heavy and Sun Belt markets including San Francisco, Austin and Dallas also recorded meaningful gains. Chicago remains a more difficult story. The market posted 522,407 square feet of positive absorption in the second quarter, but overall vacancy remained elevated at 26.7%. Average asking rent stood at $35.57 a square foot. One factor could help Chicago and other challenged markets over time: Developers aren’t adding much new competition. Only 16.3 million square feet of office space was under construction nationally at the end of the second quarter, according to Newmark. That’s a dramatically smaller pipeline than the market saw before the pandemic. Rents are another mixed bag. Asking rents rose 2.1% year-over-year nationally. But landlords are still offering hefty concessions to win tenants, with average tenant-improvement allowances 73.1% above pre-pandemic levels. Real rents remain roughly 9% to 11% below 2021 levels. So, yes, the office market is recovering. But it’s also a market in which quality matters more than ever, tenants have more leverage and older buildings face a tougher road ahead. For office owners, that’s the new reality: The market may finally be moving forward. The question is which buildings will be moving with it.

MINNESOTA REAL ESTATE JOURNAL

August 2026

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How AI is changing the day-to-day work of industrial real estate acquisitions By Cole Chernow, Senior Analyst, Acquisitions | Clear Height Properties

here is a version of commercial real estate acquisitions work that most people outside the industry never see: the hours spent pulling deal details, formatting data, and building presentation materials before any real analysis can happen. On a team tracking 50 to 70 deals a week across Midwest markets including Chicago, Indianapolis, Columbus, Cincinnati, and Minneapolis, that administrative layer adds up fast. Clear Height Properties, the Oak Brookbased industrial real estate firm, adopted Claude as a firm-wide AI tool at the beginning of this year. The decision was straightforward: the acquisitions team was spending too much time on work that did not require judgment, taking time away from work that did. Where the time was going Before AI tools entered the workflow, every deal required manual data entry. Pull the details, format them, get them into the system. At a volume of 50 to 70 deals a week, that process alone consumed an estimated 10 to 20 hours of analyst time every week. Not underwriting. Not market analysis. Just moving data from one place to another. Claude handles that intake now. Feed it the raw deal information, it organizes and formats it, and the team moves straight to analysis. Investment memoranda followed a similar path. A standard memo for a deal in diligence, covering the market, financials, rent roll, tenants, and business plan, typically ran 12 to 15 slides and took an analyst five or six hours to build from scratch. Now the data goes into Claude, and a first draft comes back that is 80 percent complete. The analyst reviews, refines, and finishes it. “The time we used to spend on formatting and assembly is going somewhere better now.”

iStock photo, credit S and V Design.

that distinction matters. A 50-basis-point difference in a cap rate can shift a purchase price by millions of dollars on a single asset. The efficiency gain from AI does not reduce that accountability, it concentrates it. Someone still has to check the numbers, and that person needs to know what they are looking for. What has changed is where analyst time goes. Less of it on data entry and document assembly. More of it on market analysis, underwriting decisions, and the judgment calls

August 2026

through consistent follow-through and direct human interaction. None of it transfers to a language model, and none of it moves faster just because the intake process did. “AI can’t replace being able to find the people who are bringing you deals. It’s a relationship business, that’s not going to change.” In Midwest industrial markets specifically, the relationship layer is the business. Finding off-market deals, sourcing debt, raising equity, and getting to the closing table all run through a network of people who have decided to work with you. That holds in Chicago as much as it does in Indianapolis, Columbus, or Cincinnati. Two tracks at the same time For Clear Height’s acquisitions team, that means running two priorities in parallel. The first is getting very good at AI tools, the efficiency gap between people who use these tools well and those who do not is only going to grow. The second is building and maintaining the broker, lender, and equity relationships that put deals together, because that is the part of the job that compounds over time in ways no software will replicate. AI tools for commercial real estate acquisitions are not a replacement for expertise. They are a multiplier on it. The firms and professionals who are figuring that out now are building a real efficiency advantage. In a business where speed and accuracy both matter, the ability to process more deals and keep analyst attention focused on higher-order work is a meaningful edge. For Clear Height, the first half of this year has made the case clearly enough. The administrative layer is thinner. The analytical work is deeper. And the time that used to go into formatting and assembly is going somewhere better. ABOUT CLEAR HEIGHT PROPERTIES

Cole Chernow (Photo courtesy of Clear Height Properties.)

that determine whether a deal is worth pursuing in the first place.

The part AI cannot touch The shift in production work has also sharpened a more important question: what does not get automated? Brokers bring deals to firms they trust to close. Owners return calls to people they know. Lenders commit to operators they The 80% rule and why the review still matters have seen perform. Equity partners back The pattern holds across tasks: Claude han- teams whose judgment they respect. Every dles the production, the analyst handles the one of those relationships is built over time, review. In industrial real estate acquisitions,

Piloted by an experienced leadership team, Clear Height Properties has built a strong platform for acquiring and operating industrial real estate in the most desirable locations throughout the central United States. From its headquarters in Oak Brook, Illinois, the firm has bought and sold 213 assets totaling nearly $1 billion over the past fifteen years, establishing a record of strong risk-adjusted returns. Driven by its core values and mission of “building wealth and creating legacies,” Clear Height is uniquely positioned to invest in, manage and add value to every asset and relationship. Learn more at clearheight.com. Cole Chernow is a Senior Analyst on the Acquisitions team at Clear Height Properties, an industrial real estate investment firm headquartered in Oak Brook, Illinois. He focuses on deal sourcing, underwriting, and acquisitions across the firm’s Midwest and Sun Belt markets, including Chicago, Indianapolis, Columbus, Cincinnati, Minneapolis, and Dallas/Fort Worth.

August 2026

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August 2026

Inside the Underwriting Process: What Affordable Housing Lenders Look for That Developers Don’t Always See Value from page 12

By Pat Craig, Managing Director, Commercial Banking

Photo courtesy of Bridgewater Bank.

f you’ve ever submitted a financing package for an affordable housing project and wondered what happens next, you’re not alone.

For many developers, underwriting can feel like a black box. Information gets submitted, questions come back, and somewhere along the way, a decision is made. But behind the scenes, lenders aren’t simply checking boxes or plugging numbers into a model. They’re evaluating risk, assessing execution, and determining whether a project is positioned for long-term success. As the Managing Director of Bridgewater Bank’s Affordable Housing team, I’ve spent more than a decade working alongside developers across Minnesota and throughout the country, helping finance projects that create and preserve housing opportunities for thousands of families. At Bridgewater Bank, affordable housing has been a strategic focus since our founding in 2005, and today we’re proud to partner with many of the nation’s leading affordable housing developers. Therefore, our team understands firsthand the challenges, opportunities, and complexities that define this industry. One thing we’ve learned along the way? Some of the most important underwriting considerations aren’t always visible from the developer’s side of the table. The good news? Understanding how lenders think can help you better position your projects, anticipate questions before they arise, and move through the financing process more efficiently. Here’s a look at what affordable housing lenders are evaluating behind the scenes.

Strong projects aren’t defined solely by their vision. They’re defined by a team’s ability to execute that vision successfully. Sources and Uses Tell a Deeper Story Than the Capital Stack Alone Affordable housing capital stacks are complex by nature, and lenders spend significant time evaluating more than whether sources simply equal uses. At Bridgewater, we’re looking at the reliability of each funding source, whether funding timing aligns with project cash needs, where contingencies may be thin, and how the project might respond if equity pricing, public funding, or construction costs shift. Layered financing can absolutely strengthen a deal. In many cases, it’s what makes Pat Craig affordable housing possible. (Photo courtesy of Bridgewater Bank.) However, layered financing can also create pressure points. Good underwriting identifies Readiness Matters as Much as Vision those pressure points early and evaluates A compelling vision is important. Every whether the structure has enough flexibility successful affordable housing development to remain intact when market conditions starts with one. But lenders also underwrite change. readiness. Are approvals advancing on schedule? Is the budget current? Do the construction Experience Is Important, but So Is Capacity Track record matters. But capacity matters documents support reliable pricing? Is the timeline realistic given municipal review, en- just as much. A developer may have successfully delivvironmental work, and third-party reporting ered numerous projects over the years, but requirements? In affordable housing, a great deal can that doesn’t automatically mean the organichange between award and closing. The zation has the bandwidth to execute another more grounded a project’s assumptions are, project at this particular moment. Underwriters look closely at organizational the more confidence lenders have that the depth, current pipeline demands, key hires, transaction can withstand inevitable chalthird-party relationships, and the strength lenges along the way. of the broader team, including guarantors, Underwriting to page 17

August 2026 Underwriting from page 16

property managers, contractors, and consultants. Because Bridgewater works with affordable housing developers across multiple markets and project types, we’ve seen firsthand how even experienced teams can become stretched when several large developments are moving simultaneously. The question isn’t simply whether you’ve done it before. It’s whether your team is positioned to do it successfully right now. Conservative Operating Assumptions Build Confidence Operating assumptions carry significant weight because they help lenders understand how a property may perform once construction is complete and real-world conditions take over. Lease-up timing, vacancy assumptions, operating expenses, insurance costs, reserves, and debt service coverage all play an important role in that evaluation. Lenders aren’t trying to make transactions more difficult than they need to be. Rather, we’re assessing whether a project remains financially healthy if costs run higher than expected, lease-up takes longer, or performance falls short of the original pro forma. When assumptions are credible, supportable, and backed by data, underwriting tends to move more efficiently and with fewer surprises.

MINNESOTA REAL ESTATE JOURNAL

tive, more predictable, and ultimately more successful for everyone involved. At Bridgewater, we’ve built our affordable housing platform around a simple belief: developers deserve a relationship-based banking partner who understands the complexities of affordable housing and can help navigate them alongside you. Whether we’re financing a new development, preserving existing affordable housing stock, or helping structure a complex capital stack, our role extends beyond providing capital. We serve as a sounding board, problem solver, and strategic partner throughout the process. That’s why many of the nation’s leading affordable housing developers continue to choose Bridgewater as a trusted banking partner. Because when lenders and developers work together as true partners, more projects move forward, more communities benefit, and more families gain access to quality affordable housing. If you’re evaluating an affordable housing project and looking for a banking partner Strong Projects Are Built on Strong Partnerships who understands the nuances of the indusThe best affordable housing transactions try, we’d love to connect>>> https://bridgeare rarely the result of perfect market con- waterbankmn.com/inquire ditions or flawless execution. More often, Pat Craig is managing director for commerthey’re the result of strong partnerships built cial banking with St. Louis Park, Minnesoon transparency, responsiveness, and trust. ta-based Bridgewater Bank. When developers understand what lenders are evaluating behind the scenes, the financing process becomes more collabora-

Compliance and Mission Alignment Are Part of Credit Quality In affordable housing, compliance isn’t a side consideration. It’s a critical part of the credit story. Rent restrictions, tenant eligibility requirements, subsidy structures, regulatory agreements, and jurisdiction-specific obligations all influence how a property operates over the long term. Lenders need confidence not only that the financing structure will close, but that the project can successfully operate within its regulatory framework for years to come. Developers who demonstrate a strong understanding of these requirements often create a smoother underwriting process and inspire greater confidence among lenders, investors, agencies, and other capital partners. In our experience, those developers also tend to build stronger relationships across the entire capital stack, creating confidence among all stakeholders involved in bringing a project to life.

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August 2026

Outdated office buildings in Minneapolis-St. Paul? They’re finding new life as apartments, industrial facilities By Dan Rafter, Editor

ffice buildings across the Minneapolis-St. Paul market continue to find new life as apartments, industrial facilities and other uses, according to the latest research from Newmark. It’s a trend that is steadily shrinking the region’s office inventory while helping reposition obsolete properties for a changing commercial real estate landscape. According to Newmark’s second-quarter 2026 Office Conversions report, 73 office properties totaling 7.6 million square feet have been removed from the Twin Cities’ office market since 2020 through either demolition or conversion. The report says another 570,000 square feet is proposed for removal through 2028, while an additional 7.2 million square feet of office space has been identified as a likely candidate for potential future conversion or redevelopment opportunities. Newmark researchers say the shift reflects lasting changes in workplace demand that emerged following the COVID-19 pandemic. As companies reduced their office footprints and increasingly favored smaller, higher-quality buildings to encourage employees back to the workplace, many older office properties were left with persistently high vacancy rates. Those buildings have become prime candidates for demolition or adaptive reuse.

iStock photo, credit Sean Pavone.

Demolition has accounted for the majority of the inventory reduction. Since 2020, construction crews have demolished 54 office properties totaling about 5.1 million square feet in the Minneapolis-St. Paul market, while 19 buildings totaling roughly 2.7 million square feet have been converted to new uses. Together, those projects have removed nearly 5.8% of the region’s office inventory. Residential development continues to dominate office conversions. Newmark found that about 2.7 million square feet of former office space has been transformed into multifamily housing, including market-rate apartments, affordable housing and senior living communities. Industrial conversions rank second at 2.1 million square feet, followed by data centers, hotels, artist lofts, retail, government and educational uses. Government incentives, including tax increment financing and historic tax credits, along with streamlined zoning approvals, have helped fuel many of these redevelopment projects, particularly those creating new housing. The Southeast submarket has experienced the greatest amount of office inventory reduction, with 1.86 million square feet removed since 2020. Meanwhile, office-to-residential conversions remain concentrated in the downtown business districts, where older buildings with smaller floor plates and great-

er window access are generally better suited for residential redevelopment than newer office towers. Dense urban settings also make demolition more difficult and expensive, encouraging adaptive reuse instead. Not surprisingly, Class B office buildings have been the primary targets for redevelopment. Newmark reported that about 6 million square feet of Class B inventory has been removed, representing nearly 9% of that segment of the market. Older Class B and Class C buildings often lack the amenities and layouts demanded by today’s office tenants, making them more attractive candidates for conversion than newer Class A properties. Large corporate campuses have also played an important role in the market’s transformation. Since 2020, approximately 2.2 million square feet of corporate campus office space has been removed or converted, representing more than one-quarter of all office inventory removed during the period. The largest example remains the former Thomson Reuters campus in Eagan, where portions of the property are being redeveloped for warehouse, data center and multifamily uses, illustrating how former suburban office campuses are evolving to meet today’s commercial real estate demands.

MINNESOTA REAL ESTATE JOURNAL

August 2026

Minnesota 14th Annual

MULTIFAMILY ECONOMICS, FINANCE & TECHNOLOGY SUMMIT September 25, 2026

7:30 AM - Registration & Networking 8:00 AM - 12:00 PM Program

The Club at Golden Valley

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speakers:

Aubrey Albrecht - Minnesota Multi Housing Association Shaun Chambers - Slate John Dooley - Sunrise Banks Dusty Evenson - Metronet Monte Hilleman - Sustainable Investment Group (SIG) Steve Johannes - Bridgewater Bank Steven Ladin - CoStar Group | Apartments.com Scott Loving - JLL Capital Markets Wilson Molitor - Walker & Dunlop Douglas Monson - First Resource Bank Matt Mullins - Bricks and Brand Mike Olson - 360 Security Services Todd Phillips - Legacy Property Trust John Rent - Associated Bank Commercial Real Estate John Schmid - Cozen O’Connor Barry Schneiderman - U.S. Bank Joel Torborg - CBRE

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20 1031 from page 7

The identification rules provide some flexibility when used correctly. Investors may generally identify up to three properties regardless of value, or any number of properties as long as the total fair market value does not exceed 200 percent of the relinquished property value. There is also a narrow 95 percent exception rule in certain situations where more properties are identified. Those rules are designed to give investors options. But those options must be exercised on time.

the replacement property is actually received within the first 45 days. An investor may fully intend to complete an exchange. The investor may be actively looking at properties, negotiating terms, touring assets, underwriting opportunities, and lining up financing. But if the replacement property is not properly identified within the 45-day period, the exchange may fail. Once the deadline has passed, the answer is not to “clean up” the file. The answer is to A Failed Exchange Is Expensive, But Fraud Is deal with the facts honestly. Worse The Opportunity: Better Planning Before Closing Missing the identification deadline can be A well-run 1031 exchange can still be a costly. A failed exchange may trigger capital highly effective tax-deferral strategy. But it gain, depreciation recapture, state tax, and requires planning before the sale closes, not other consequences. damage control after the identification period But Dobrich shows a more serious risk. expires. A failed exchange is a tax problem. A failed The opportunity for investors is process exchange supported by backdated or fabridiscipline. cated documents is a fraud problem. Before closing on the relinquished propWhen a taxpayer creates false documents, erty, an investor should already be thinking submits false information, or asks others to through the replacement-property strategy. help create a false record, the issue is no What properties are realistic targets? Are longer just whether the transaction qualifies there backup options? Is financing available? under Section 1031. The issue becomes Are the timelines practical? Has the qualified credibility, penalties, and potentially criminal intermediary been engaged before closing? exposure. Does the investor understand the 45-day and The Tax Court was especially troubled by 180-day deadlines? the fact that documents were created after

August 2026

the fact to make the replacement properties appear timely identified. The court viewed that conduct as evidence of fraud. That is why Dobrich remains such an important warning. The taxpayers did not simply lose the exchange. They lost the exchange and then made the outcome worse by trying to disguise what had happened. Related Cases Put Dobrich in Context Dobrich also fits into a broader line of 1031 exchange cases. The starting point is Starker v. United States, the case that opened the door to non-simultaneous exchanges. Before Starker, many exchanges were thought of as direct swaps. Starker helped establish that, when properly arranged, a deferred exchange could still qualify for tax deferral under Section 1031. Congress later responded by adding the statutory guardrails we know today: the 45-day identification rule and the 180-day exchange period. Those deadlines exist because deferred exchanges cannot remain open-ended. Another important case is Christensen v. Commissioner, which illustrates how strictly the exchange deadlines can be applied. In that case, the court addressed the rule that replacement property must be received by 1031 to page 21

MINNESOTA REAL ESTATE JOURNAL

August 2026 1031 from page 20

the earlier of 180 days or the due date of the taxpayer’s return, including extensions. This is especially important for exchanges that begin late in the tax year. If the 180th day falls after the tax-return due date, the taxpayer may need to file an extension to preserve the full exchange period. Dobrich is cited in cases involving backdated tax documents more generally. Courts are understandably skeptical of documents created after the fact to support a tax result that was dependent on timely action. If a document is trying to prove something happened on time, but the document itself was created late and falsely dated, it can become evidence of the problem the taxpayer is trying to avoid. Practical Watchouts for Investors Investors can take several practical lessons from Dobrich: • Identify replacement property on time and in writing. Do not rely on memory, private conversations, informal notes, or after-the-fact explanations. • Use real replacement candidates. Placeholder properties may create problems if the facts show there was never a genuine intention to acquire them.

• Engage the qualified intermediary before closing. Once the taxpayer has actual or constructive receipt of sale proceeds, it may be too late to create a valid exchange. • Calendar the deadlines immediately. The 45-day and 180-day periods are not business-day deadlines. They move quickly and are unforgiving. • Pay special attention to year-end exchanges. If the exchange period could be shortened by the tax-return due date, coordinate with tax advisors early and consider whether an extension is needed. • If something goes wrong, tell the truth. Report the transaction properly and deal with the tax consequences. Do not backdate documents, re-date letters, or attempt to “memorialize” an identification that did not actually occur within the deadline. Final Thought The most important lesson from Dobrich is straightforward: a 1031 exchange can defer tax, but it cannot rewrite history. The rules require timely action, clean documentation, and respect for the process. If replacement property is not properly identified within the 45-day window, the exchange may fail. That can be expensive, but it can be addressed honestly. Trying to repair the problem with false or backdated documents is different. That does

not preserve the exchange. It creates a much larger problem. For real estate investors, Dobrich v. Commissioner is a reminder that the best 1031 planning happens before the closing table, not after the deadline has passed. The exchange file should tell the truth as events unfold, not try to recreate the story later. When the IRS and the Tax Court review a transaction, they are not simply looking for paperwork. They are looking for whether the paperwork reflects what actually happened. That is the real warning from Dobrich: deadlines matter, documentation matters, and the truth of the transaction matters most. Jeff Peterson is a Minnesota attorney and former adjunct professor of tax law. He serves as President of Commercial Partners Exchange Company, LLC, where he facilitates forward, reverse, and build-to-suit 1031 exchanges nationwide. Jeff regularly collaborates with attorneys, accountants, and real estate professionals on exchange strategies. Reach him at 612-643-1031 or JeffP@CPEC1031.com or on the web at www. cpec1031.com. © Copyright 2026 Jeffrey R. Peterson All Rights Reserved

MINNESOTA REAL ESTATE JOURNAL

August 2026

Davis from page 4

is expected to make labor even more expensive and scarce in the years ahead. Health systems continue to face their own reimbursement and cost pressures and are opting to renew leases or move into existing second-generation space rather than commit to ground-up development. The rental rate for lease renewals and second-generation spaces may be 30-40% lower than newly completed construction. “The demand for ambulatory care hasn’t gone away,” Davis said. “But the math on new construction is harder to make work than it was a few years ago, and that’s pushing health systems toward existing space rather than new builds.” Healthcare Real Estate’s Long-Term Case Remains Intact Despite near-term headwinds, Davis remains confident in the sector’s long-term trajectory. The firm points to the recent sale of Kane Anderson Real Estate to a British private equity group as evidence that healthcare and healthcare-adjacent real estate has moved from a niche allocation to a core one for institutional investors, alongside sectors like industrial and logistics. “Healthcare real estate is still a fundamentally need-based asset class,” Davis said. “This year has required more discipline and

Mark and Stewart Davis (Photo courtesy of Davis.)

more patience than we expected in January, but the long-term demand drivers — an aging population, the shift to outpatient and community-based care, and constrained supply — are still very much in place. “We believe the back half of this year and into 2027 will bring clarity to the market.” Davis, founded in 1986, is a national healthcare real estate firm offering expertise in

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August 2026

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Office from page 1

$97 million rehabilitation was completed more than a year ago, transforming a largely vacant office building into a bustling residential property with amenities that refer back to the property’s past use as an office tower. These amenities include the property’s Business Lounge, which provides coworking space, and its C-Suite, located on the 18th level, which serves as a bar and lounge. For Michael Krych, partner at BKV Group’s Minneapolis office, Landmark Tower demonstrates why developers and architects shouldn’t limit their conversion searches to century-old office buildings. “There are plenty of office buildings of different eras and vintages that can work for this housing shortage we have,” Krych said. That doesn’t mean every modern office tower is a good fit for conversion. Conversions can be expensive. To work, the economics, building systems, floor plates and location of an office property must combine to provide the right fit. Landmark Tower had several advantages from the start, Krych said. First, there’s its location. The tower sits in the heart of downtown St. Paul, overlooking Rice Park and offering 360-degree views of the city and the

Mississippi River. Then there is its architecture, another feature that also helped make the conversion possible. The building’s curtain-wall design rises 25 stories above a footprint formed by three staggered rectangular prisms. Those steps created an unusual floor plate and, ultimately, a collection of apartments with prominent corners and expansive views. “The building footprint was important for it to be successful,” Krych said. “A lot of projects don’t have that amount of stepping.” That configuration helped BKV Group create corner residences with distinctive layouts and views, giving the apartments a selling point beyond its location in a converted office building. The building’s history also proved important to the redevelopment. In 2022, Landmark Tower was added to the National Register of Historic Places. The designation wasn’t based solely on architectural signifi-

August 2026

Photos of Landmark Tower in downtown St. Paul courtesy of BKV Group. Office to page 26

August 2026

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August 2026

Office from page 24

cance. The tower’s connection to American Hoist and Derrick Co., a St. Paul company with more than a century of history. helped establish its historical importance, Krych said. The company manufactured cranes and hoists used on major projects around the world, including the Panama Canal and Mount Rushmore. Eventually, the company built the tower that now bears the Landmark name, though financial problems ultimately contributed to its downfall. The historic designation brought something else that mattered enormously: access to federal and state historic tax credits. “ If that wasn’t in place for Landmark Tower, it would not have gotten done,” Krych said. “Without those credits, the price would have been too steep to make it work.” That point gets to the heart of the office-conversion debate. The question isn’t necessarily whether a building can physically be transformed into apartments. The question is whether the numbers work. BKV Group has spent considerable time studying that issue. During the post-COVID slowdown, the firm evaluated more than 20 vacant or underused buildings in Minneapolis and another 12 to 15 in St. Paul, examining

Photos of Landmark Tower in downtown St. Paul courtesy of BKV Group.

their locations, floor plans and potential residential layouts. “Not every building works,” Krych said. “But there are plenty that do. I do think we will see a lot more of these younger buildings converted into multifamily space.” What makes an office building a good fit for conversion to apartments? Parking, trash collection and ease-of-access for mainte-

nance vehicles are important factors. Then there are the physical characteristics of the building: column spacing, window sizes, stair locations, structural systems and the location of the core. Mechanical systems can pose another major hurdle. Landmark Tower’s post-tensioned concrete construction, for instance, meant Office to page 28

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Jay Kodytek jay.kodytek@rejournals.com 612-940-3713

MINNESOTA REAL ESTATE JOURNAL

For Landmark Tower, that neighborhood is downtown St. from page 26 Paul. Krych said that downtown living is still attracting a steady BKV Group couldn’t simply drill through the stream of residents who want floors wherever it wanted. to live in busy, vibrant neigh“We had to X-ray the floors to understand borhoods. and know where the tendons were,” Krych “Urban city dwelling and livsaid. ing is pretty cool,” Krych said. The building’s curtain wall presented its “It’s so different and unique and own challenges, including areas where the fun than what you experience exterior enclosure had begun to fail. beyond the city limits. The key BKV Group is tackling additional conver- is offering people a place that sions of more modern buildings to apartment has a real ‘there’ to it.” developments, Krych said. A good example is in St. Louis. Here, the firm is working on another conversion involving a 1960s International Style complex overlooking the famous Gateway Arch. The southernmost tower is being converted to affordable housing, while another tower retains its ownership/ condominium use and a separate developer is converting the middle building to housing. That project, too, is relying on historic and state tax credits, along with low-income housing tax credits. The takeaway? Downtown residential conversions don’t necessarily require historic office buildings to work. The key instead is for developers to find buildings of any age that they can convert economically and neighborhoods that attract residents.

August 2026

Office

Photos of Landmark Tower in downtown St. Paul courtesy of BKV Group.

August 2026

MINNESOTA REAL ESTATE JOURNAL

Minnesota 13th Annual

DOWNTOWN MINNEAPOLIS summit October 30, 2026

7:30 AM - Registration & Networking 8:00 AM - 1:00 PM Program Renaissance Minneapolis Hotel, The Depot

speakers:

Scan for more information and to register www.rejournals.com/upcomingevent/

Abe Appert - CBRE Lester Bagley - Minnesota Vikings Football John Bailey - Weidner Apartment Homes Wendy Blackshaw - Minnesota Sports & Events Matthew Caldwell - The Minnesota Timberwolves and Lynx Michael Clark - Renaissance Minneapolis Hotel Dan Collison - Sherman Associates Dean Dovolis - DJR Adam Duininck - Minneapolis Downtown Council-Downtown Improvement District Erin Fitzgerald - Willow Peak Jacob Frey - City of Minneapolis Bob Gardner - Gardner Builders Logan Gerken - Mortenson Kari Glaser - nimble Jacob Graff - Cordia Energy Joe Grunnet - DRG Erik Hansen - City of Minneapolis Ben Kepple - PCL Construction Jon Lanners - Onward Investors Matthew Loven - Maslon LLP John Marshall - Xcel Energy Jim Montez - Transwestern Tom Pohlad - Minnesota Twins Michael Rainville - Minneapolis City Council Ward 3 Sean Ryan - Ryan Companies Kevin Salmen - Transwestern Speaking and Sponsorship opportunities available Elizabeth Shaffer - Minneapolis City Council Jeff Johnson Jay Kodytek Chad Tepley - CDT Realty jeff.johnson@rejournals.com jay.kodytek@rejournals.com Harrison Wagenseil - CBRE 612-819-0385 612-940-3713 Pearll Warren - Minneapolis City Council

sponsors:

MINNESOTA REAL ESTATE JOURNAL

August 2026

Industrial from page 1

Rogers Gateway, rendering courtesy of Oppidan.

offers access to the northern portion of the metro while providing connections for companies moving goods throughout the region and beyond. Durand said that Rogers remains a draw for industrial users. “The northwest Twin Cities is currently one of the strongest submarkets for industrial leasing activity,” he said. “Rogers is particularly attractive because of its access to I-94, growing population and connectivity to the broader metro and regional markets. Those fundamentals were a major factor in our decision to move forward with Rogers Gateway.” For Oppidan, the project is about more than adding another industrial building to the market. The development is also positioned as an investment in Rogers, a city that has continued to attract population, businesses and commercial development. Once fully leased,

Rogers Gateway is expected to bring new jobs to the community, attract additional business investment and expand the city’s commercial tax base. The building’s flexibility could be particularly important in today’s industrial market, where tenants have increasingly specific requirements for their facilities. Rogers Gateway will offer configurations capable of accommodating different tenant sizes and operational needs. That flexibility is intended to allow businesses to customize their space rather than force their operations into a one-size-fits-all building. The project comes as developers throughout the Twin Cities continue to focus on industrial properties that can serve both local and regional users. Proximity to major highways has become an increasingly important consideration for companies seeking to con-

trol transportation costs and reach customers efficiently. Oppidan has assembled a team of Minnesota-based and regional partners for the development. Alliant is serving as civil engineer, Mohagen Hansen is the architect and Rochon is the general contractor. Park State Bank is providing financing, while CBRE is handling leasing. Construction is now underway, with completion targeted for November. Leasing opportunities are available for businesses looking for industrial space in the northern Twin Cities market. For Oppidan, the project represents a familiar development formula: Find a growing market, secure a location with strong transportation access and build flexible space capable of serving a range of users. “We expect to see continued industrial development in areas where demand and strong market fundamentals support it,” Durand said. “Rogers Gateway is a good example. Its location in a strong industrial submarket, direct access to I-94 and flexibility for a range of users made it a compelling opportunity for speculative development.” The key, of course, is to provide industrial space that today’s users want. Duand said that functionality is key. Efficient truck circulation, ample parking, modern loading capabilities, strong clear heights and flexible space are all important, said. “Location is also critical, particularly access to major transportation routes and nearby services that support employees,” Durand said.

Defining spaces that matter. Let’s talk about your next project... www.parameters.com

August 2026

MINNESOTA REAL ESTATE JOURNAL

Minnesota 28th Annual

INDUSTRIAL

COMMERCIAL REAL ESTATE SUMMIT November 12, 2026

7:30 AM - Registration & Networking 8:00 AM - 12:00 PM Program

The Club at Golden Valley

Scan for more information and to register www.rejournals.com/upcomingevent/

speakers:

Mark Anderson, PE - Sambatek Ross Briggs - Bridgewater Bank Nate Erickson - Stack Industrial Partners Jason Folger - Gardner Builders Gregory Frahm-Gilles - Anoka County Regional Economic Development Tina Goodroad - City of Lakeville Nancy Hoffman - Chisago County HRA - EDA Mark Kolsrud - Colliers Greg Kruschke - City of Owatonna Deanna Kuennen - City of Farmington Connor McCarthy - United Properties Leslie McGillivray-Rivas - City of Faribault Peter Mork - Capital Partners Jeremy Thomas - RJ Ryan Construction Eric Van Oss - City of Rosemount Judd Weliver - CBRE Josh Wilcox - Enclave Companies Joey Zimmerman - Zimmerman Commercial Construction More speakers to be announced...

sponsors:

Speaking and Sponsorship opportunities available Jeff Johnson jeff.johnson@rejournals.com 612-819-0385

Jay Kodytek jay.kodytek@rejournals.com 612-940-3713

MINNESOTA REAL ESTATE JOURNAL

August 2026

Minnesota 14th Annual

CONDO &

HOMEOWNERS ASSOCIATION SUMMIT November 19, 2026

7:30 AM - Registration & Networking 8:00 AM - 12:00 PM Program

The Club at Golden Valley

Scan for more information and to register www.rejournals.com/upcomingevent/

speakers: Anthony A. Remick - Hellmuth & Johnson

sponsors:

Phaedra Howard - Hellmuth & Johnson Jim Pierce - Gavnat Josh Reams - Sharper Management Brenda Sauro - Hellmuth & Johnson Eric Skarnes - Insurance Warehouse More speakers to be announced...

Speaking and Sponsorship opportunities available Jeff Johnson jeff.johnson@rejournals.com 612-819-0385

Jay Kodytek jay.kodytek@rejournals.com 612-940-3713