We know that the housing market has taken its hits over the last year. Commercial real estate has as well. The demand for both retail and office space is down.
But one developer is banking on location to bring tenants in. Duke Realty Corporation is building a 380-thousand square foot development off of Interstate-394 in St. Louis Park called the Shops at West End.
Set to open later this year, the place is 46 percent full. Among the signed leases is a 14-screen movie theatre, grocery store and several restaurants. And Duke has other tenant prospects, hoping to soon reach 60 to 65 percent occupancy.
"The economy obviously is not in real good shape right now and that extends to the retail leasing economy as well, but we have a project that has an awful lot going for it. We have a great location and the demographics around here are great. There are established houses and rooftops as well as businesses, an awful lot of office square footage to support the restaurants that are going into the project. We're three miles outside downtown...so it's a project that defines what's important in commercial real estate, location, location, location," says Patrick Mascia, senior vice president of Duke Realty Corporation.
It's a promising outlook in a climate where commercial vacancy rates are up.
According to the Minnesota Commercial Association of Realtors, the office space vacancy rate in 2008 was 15.5 percent, up from about 14.6 in 2007. It's the same situation for retail space with a vacancy rate of 7.1 percent in 2008, up from 5.9 percent in 2007.
KARE 11 also spoke with Tom Musil, a real estate expert in the business school at the University of St. Thomas. He says vacancy rates are driven by tenants' ability to sell. That's tough when people are spending less. Musil says we're seeing a lot of building owners offer tenants incentives, reduced rent in some cases, to stick around.
(Copyright 2009 by KARE. All Rights Reserved.)
(Copyright 2009 by KARE. All Rights Reserved.)
