The Free Press, Mankato, MN

March 23, 2013

Development surging locally

By Tim Krohn
Free Press Staff Writer

MANKATO — Don’t tell local developers about the economic recovery being slow. From commercial land to offices, apartments and even single-family homes, activity is continuing to surge after a strong winter season.

“The market’s been very strong. Retail is hot, land is very warm. In the office and warehouse, we’re seeing occupancy levels we haven’t seen in years,” said Tim Lidstrom of Lidstrom Commercial Realtors in Mankato.

And for the first time in a while, Lidstrom is seeing multiple offers coming in on undeveloped commercial land.

Some of that interest is spurred by the recent, long-awaited announcement by Wal-Mart that it is building a massive distribution center on the city’s east side with an opening date of late 2015. The project is expected to bring spin-off businesses to the area. 

Since about the beginning of the year, Lidstrom has sold four strip malls, seven buildings for a total of $7.5 million and tracts of land totaling 27 acres for more than $2 million.

“We finished the year very strong. The reason is selected national retailers are in a boom,” Lidstrom said.

“And we’re having very strong interest from investors for quality properties with good cash flow. And banks are willing to lend for those.”

Mike Drummer of Drummer Construction said it’s been the best winter in a long time for new projects.

He’s worked on office complexes, a bank, apartment projects, and a new day care center that is planned behind the Microtel on St. Andrews Court. The day care will be the first building in the second phase of his St. Andrews business park.

And while the market for new apartments has been strong for some time, Drummer says the single-family housing market has finally exploded.

“It’s been incredible. I’ve never seen this much demand ever, even in good times.”

He attributes the trend to some pent-up demand coupled with lower building material costs and interest rates, costs that people are starting to see tick up.

“I think that’s spurred a lot of people to make the move.”

He said the senior market — often twin homes — is coming back after the supply of existing twin homes has been largely filled in recent years.

“We’re seeing new (twin homes) built now.  And that opens up houses, often in the older neighborhoods. That’s good for young couples, starter homes. There’s a real shortage of (starter homes) on the market.”

He’s also involved, with other contractors, in the first phases of larger apartment complexes in upper North Mankato and on the east edge of Mankato.

“Rental is the hottest market of all. Student housing, families, seniors, young professionals.

“People keep thinking we’re going to get overbuilt on rentals, but you put an ad in (for an apartment) and you get four calls. We’ll get to the point we have enough, but not for a while,” Drummer said.

And the same demand seems to be continuing for strip malls, even as new ones have been popping up like dandelions.

“We keep getting calls from businesses that aren’t (in Mankato) yet. There’s a lot of small 2,500- to 4,000-square-foot businesses that are interested. I think we’re on the radar now that we’re a MSA,” he said, referring to the Mankato region’s designation a couple of years ago as a Metropolitan Statistical Area.