Healthcare: 34,000-SF medical office building to go up in Blaine
from Finance & Commerce
Health care continues to be an oasis in the desert that is Minnesota’s commercial real estate development sector.
The latest example: MSP Commercial announced Tuesday that it is about to break ground on a 34,000-square-foot medical office building in Blaine; the building is already 87 percent leased by two health care enterprises – Minnesota Eye Consultants and the Noran Neurological Clinic.
Alex Young, senior vice president at MSP Commercial, said both companies will be moving from nearby locations; Minnesota Eye Consultants, based in Bloomington, will take 13,000 square feet, while Minneapolis-based Noran will lease 16,000 square feet.
“This will be a higher-profile location for them,” Young said. “They’ll also be adding services. … they’re taking significantly more space than they currently occupy.” Among other operations, Noran will have a six-bed sleep clinic; Minnesota Eye will have a surgery center and an exam area.
Young estimated total development costs at more than $8 million.
The single-story building will be along Highway 65 at 109th Avenue Northeast. Young said a tenant is still being sought for 4,500 square feet of the building.
While MSP has taken on projects that are 100-percent leased before building begins, Young said those are typically single-user projects. And any project of this size, he added, is a significant win in the current commercial real estate market.
“There is debt for good projects, but it’s still difficult,” he said. “We used to know how appraisals would come back, we didn’t know on this one. We’re not sure which vacancy rates (to assume). … It requires constant contact with the banker to understand how they’re going to underwrite the deal … each bank is doing things differently these days. Some banks are leaning harder on ratios, some banks are leaning harder on loan to value.”
Though a building permit has not been issued for the project; Young said plans call for the building to be open for business by Nov. 1.
While not strictly a health-care developer, “we’ve carved out a niche,” Young noted. Last year, the company opened two buildings – one in Blaine with Alina, and another in Eagan, occupied by HealthEast and Dermatology Consultants.
Mark Davis, principal of The Davis Group, based in Minneapolis, represented Noran. Timco Construction Inc. of Plymouth, is the general contractor. BDH & Young Space Design, Edina, is the lead architect. Eric Rogers, at Associated Bank, Minneapolis, is handling the financing.
