Home New mexico real estate It’s Not Just the Twin Cities: Investors Drawn to Statewide Commercial Real Estate Market

It’s Not Just the Twin Cities: Investors Drawn to Statewide Commercial Real Estate Market


Minnesota’s commercial real estate market remains an attractive destination for investors. And while much of this investment activity is centered in the Twin Cities themselves, Minneapolis and St. Paul aren’t the only municipalities attracting investor money.

No, investors are pouring their money into commercial real estate across the state, as evidenced by a recent transaction.

Multifamily investor Northland has entered one such market, Rochester, Minnesota, about 86 miles from Minneapolis, by acquiring SoRoc in Maine, a 186-unit garden community spanning three three-story apartment buildings.

Mike Campbell, associate vice president of acquisitions at Newton, Mass.-based Northland, said the company annually scours the country for secondary and tertiary markets that feature strong demographics and equally strong public/private partnerships. .

This research put the Minneapolis-St. The Paul area, and all communities within about an hour and a half drive, on Northland’s radar.

Campbell said Rochester makes sense because of its strong demographics, stable employment base and bustling downtown.

And there is affordability. Northland prefers to invest in multi-family properties whose rents are affordable to most potential tenants nearby.

“Affordability is huge for us,” Campbell said. “It is important for us to know that residents of the market are comfortably able to pay the rents. That doesn’t always happen in some of the country’s most expensive markets. The markets we seek are those where residents are not overburdened with rents.

SoRoc in Maine itself was also attractive to Northland, Campbell said. The property is adjacent to undeveloped land, which Northland plans to develop with an additional 160 to 200 apartments, all of which will be part of an expanded SoRoc in Maine.

The hope is to begin that construction within a year of acquiring the property, Campbell said.

This isn’t the first time Northland has taken such an approach. Campbell said the company purchased a multifamily property in Santa Fe, New Mexico, which also had a small parcel of adjacent land. Northland has also built new units here, also incorporating them into the existing apartment complex.

Each of SoRoc’s existing buildings in Maine offers studio, one-, two-, and three-bedroom units. SoRoc on Maine also offers a variety of indoor and outdoor amenities. This includes a central green and a pond, a swimming pool, a terrace with hot tub and a pétanque court.

SoRoc in Maine also benefits from its prime location. The apartment complex is near downtown Rochester, home to the Mayo Clinic headquarters and 3 million square feet of office and data centers for IBM.

Campbell said Northland plans to invest in more multifamily properties in Minnesota.

“Our ultimate goal is to gain a foothold in an area,” Campbell said. “We like to build a portfolio of units within a close radius of the existing properties we own.”

Northland owns and operates a multifamily portfolio that includes more than 26,000 units across the United States. The acquisition of Rochester adds to Northland’s portfolio of long-term markets in New England, Austin and the Southwest and Southeast United States.

Campbell said multi-family properties made up 99% of Northland’s portfolio before the pandemic. That focus has only accelerated since COVID-19 hit, he said.

“Despite an influx of capital into the space and very aggressive and high competition, multifamily continues to be our bread and butter,” Campbell said.

Why does the multifamily remain an asset class favored by investors? Campbell said the supply of single-family homes remains low, sending more people into apartments.

“We now have nearly four generations of Americans competing for the same home,” Campbell said. “The stock is very limited. Rental continues to be an option for those unable to purchase. It seems to be ubiquitous regardless of the market in the United States. For now, we don’t see this trend changing.

Then there’s the number of new investors moving away from assets like offices and retail, product types that have been hit hard by the pandemic, and instead pouring their money into multifamily.

“Multifamily is more inflation resistant,” Campbell said. “It offers better risk-adjusted returns. It provides predictable cash flow in otherwise uncertain economic times.