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NORTH AMERICAN REPORTS
From Site Selection magazine, January 2012
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by ADAM BRUNS

What Goes Around Comes Around

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signature redevelopment project is chugging forward in downtown Minneapolis.

In November, Irvine, Calif.-based WNC & Associates, a national investor in urban renewal and affordable housing projects, announced it had provided $8.3 million in New Markets Tax Credit financing to United Properties for the acquisition and renovation of The Ford Center in Minneapolis. The project is slated to deliver more than 270,000 sq. ft. (25,083 sq. m.) of LEED-certified office space, creating approximately 900 new jobs within a Federally Designated Empowerment Zone.

When complete, the building, originally built in 1912, will serve as the national headquarters of HGA Architects and Olson Advertising, with the firms executing 15- and 12-year leases respectively. The firms will occupy a combined 215,000 sq. ft. (19,975 sq. m.) of office space, accounting for 80 percent of the building's total occupancy. The building will also house BrandLab, a local nonprofit dedicated to creating opportunities within the marketing industry for minority and economically disadvantaged youth.

RJM Construction began renovations on the historic building last summer, including restoration of 700 windows and replacement of 300 more. Another of many changes is transforming the former train shed into an executive parking and fitness center area.

The Ford Center once housed a vertical assembly plant and showroom from Ford Motor Co., and is located within an area suffering from an unemployment rate nearly four times the national average, a poverty rate of 36.6 percent and median family income that is 21 percent of the national average.

The rehab comes at the same time that Ford has ceased Ford Ranger production at another Twin Cities plant.

Ford Center is located near Target Field, home of Major League Baseball's Minnesota Twins, and a planned expansion of the Minneapolis rail system. Minneapolis-based United Properties is owned by the Pohlad family, which also owns the Minnesota Twins.

Trains past and future travel by The Ford Center in downtown Minneapolis.
Photos courtesy of United Properties/Minnesota Historical Society

Carolinas Grow Finer

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wo cities in different states but just an hour and a half apart by I-85 saw major projects come home to roost in November.

First, TD Bank announced it would create more than 1,400 new jobs in the next three to five years at its campus (pictured) in Greenville, S.C, and also add more than 200 new positions in Lexington, S.C., just outside the state capital of Columbia. The current campus in Greenville houses just 160 employees. The $17.1-million renovation of the three buildings, totaling 300,000 sq. ft. (27,870 sq. m.), will begin in early 2012 and will aim for LEED-Gold certification.

Two weeks later, Cincinnati-based Chiquita Brands International announced its plans to relocate corporate headquarters and its more than 300 positions to Charlotte, N.C., and also bring to town more than 100 additional positions currently spread across the U.S.

"Importantly, the Charlotte airport provides improved access to international markets, customers and Chiquita operations around the world," said Fernando Aguirre, chairman and CEO, whose team was courted since last May. The company expects that total project related costs will total $30 to $35 million during the next two years, of which $24 million will be recaptured through state, local and other incentives during the next decade. The average wage for the new jobs will be more than $106,000, plus benefits. The annual average wage in Mecklenburg County is $51,584.


Whatever You Do, Don’t Compare These Numbers

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t's more than $10 per hour less expensive to compensate a private industry employee in the East South Central region of the U.S. than it is in New England. That's one conclusion to be drawn from analysis of U.S. Bureau of Labor Statistics data released in early December. Total employer compensation costs for private industry workers averaged $28.24 per hour worked.

State and local government employers spent an average of $40.76 per hour worked for employee compensation in September 2011 — or 44 percent more than private-sector employers. However, warned the BLS, "Compensation cost levels in state and local government should not be directly compared with levels in private industry. Differences between these sectors stem from factors such as variation in work activities and occupational structures."

Some state officials are comfortable doing so however. In Wisconsin in late October, Gov. Scott Walker's administration proposed state worker pay reforms that would result in wages closely resembling private-sector pay.


Inside and Outside Indicators Stoke Optimism, Caveats

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eptember U.S. manufacturing technology orders totaled $606.56 million according to AMTDA, the American Machine Tool Distributors' Association, and AMT – The Association For Manufacturing Technology. The total was up 51.9 percent when compared with the total of $399.32 million reported for September 2010. The report provides regional and national U.S. orders data of domestic and imported machine tools and related equipment. For the first three quarters of 2011, the central swath of the country led all regions in percent increase in orders over the same period in 2010.

With a year-to-date total of just over $4 billion, 2011 through September was up 91.9 percent compared with 2010. But there was more reason than a simple resurgence: "American manufacturers are still rushing to beat the end-of-year bonus depreciation deadline," said Peter Borden, AMTDA president.

Meanwhile, Phase I Environmental Site Assessments (ESAs) point to the nation's western half. The 13-state region comprising California, Hawaii, Alaska, Oregon, Washington, Nevada, Arizona, New Mexico, Utah, Colorado, Wyoming, Idaho and Montana experienced a 10.4-percent increase in total industry ESAs in the third quarter of 2011 compared to the third quarter of 2010, according to data from Environmental Data Resources, Inc., cited by Partner Engineering and Science, Inc., a national environmental and engineering consulting firm based in El Segundo, Calif.

"In all, there were 11,969 Phase I ESAs performed in the third quarter in the West, signaling many active and pending deals," said Partner. More than half were in California. San Francisco was the third highest growth metro in Phase Is, at 44 percent. "Los Angeles (up 31 percent), San Diego (up 23 percent) and Seattle, Wash., (23 percent) were all among the top 10 cities with the highest transaction volume in the U.S. in the latest quarter," said Partner.

Good Sign or Bad Sign?

Dianne Crocker, Principal Analyst for EDR Insight, says trends in due diligence activity vary considerably from region to region. "California is one of only several states that benefit from the perfect mix of drivers," she says. "They contain global gateway metros that are attracting investors' interest as well as metros with the highest volume of outstanding distressed asset volume. Together, these forces are driving demand for property environmental due diligence today."

Hot spots for ESAs do tend to match up well with dynamic activity in commercial real estate, she says, citing a correlation with top metro areas for investment found in the recently released "Emerging Trends in Real Estate 2012" report from PricewaterhouseCoopers and the Urban Land Institute.

Nationally, Phase I ESA activity was up 7 percent in the third quarter, compared to the third quarter of 2010. Austin, Texas — No. 2 in the PwC/ULI report's list of Top 20 investment prospect markets for real estate — led all U.S. cities with a 52-percent increase in ESAs year-over-year.

The strongest drivers for environmental due diligence work include distressed asset purchases by REITs and other private equity groups, foreclosures and sales of distressed loan portfolios by national lenders, and borrower refinancing, according to Crocker.



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