Posts filed under ‘Industry News’

2017 Awards of Excellence Project Winners

Congratulations to the project winners at NAIOP Minnesota’s 34th Annual Awards of Excellence!

See the complete list of 2017 project nominees.

See the detailed list of winners along with their full project teams.

October 10, 2017 at 9:46 am Leave a comment

Warning signs signal need for better long-term economic strategy

At first glance, Minnesota’s economy appears to be humming along like a well-oiled machine. Beneath the surface, however, some troubling signs are emerging. The Minnesota Department of Employment and Economic Development, for example, reports that exports declined five percent during the first quarter of 2016. That’s better than some neighboring states but it’s nevertheless negative. DEED’s 2015 year-end business conditions report also suggests that companies are investing less. And the Minnesota office of Management and Budget now reports that State revenues are off $42 million, or 2.9 percent, from forecasts.

In its monthly Business Index report, Creighton University noted that Minnesota fell below “growth neutral” – meaning a contraction. The report noted that Minnesota’s “[b]usiness losses for metal manufacturers and machinery producers more than offset gains for computer and electronic product manufacturers and food processors in the state,” adding that job growth is below average. And NAIOP’s own analysis recently revealed that Minnesota is nowhere to be found in its listing of the Nation’s Top 10 economies – normally a regular home for the Gopher State.

One hallmark of effective public policy is how well it can make appropriate adjustments today in order to achieve greater (or maintain today’s) prosperity in the future. In order to influence policy for the better we must get engaged and stay engaged. If we put the time in now and work on public policies concerning issues such as property valuation and tax, solid waste, transparency, etc., we can positively impact all economic indicators, including the unemployment rate and new job creation.

The kind of work we have to do is just starting with the current election season. In addition to national and statewide races, it is critical that we support business-minded candidates for the State Legislature. After Nov. 8, we will need to pull together and reach out to policy makers on the issues that directly influence our businesses.

If you agree and want to join with us in our mission, please contact me: quinn@naiopmn.org

September 29, 2016 at 11:48 am

MPCA Waste Proposal Could Cost Dearly

If your company plans to engage in new construction, reclamation or renovation, and you expect to deal with solid waste or contaminated soils, you need to express your thoughts this week to the Minnesota Pollution Control Agency (MPCA) regarding its proposal to substantially increase waste disposal taxes.

If their recommendation is adopted, it could have a chilling effect on the metropolitan region’s new development, building renovation or other construction sector activities that, in turn, could lead to yet more significant economic and social problems. Considering the current regulatory barriers to urban infill projects, for example, significant tax increases such as these could effectively stagnate redevelopment of already run-down regions in our metro area.

To voice your opinion about the proposed tax increase on solid waste, please send your email comments NO LATER THAN FRIDAY, SEPTEMBER 16 AT 5 P.M. to: johanna.kertesz@state.mn.us

Issue Background
The MPCA’s current proposal, among other issues, deals with construction and demolition materials as well as industrial waste such as contaminated soils. Taxes on mixed municipal solid waste (MMSW) are much higher than for industrial solid waste (ISW). The MPCA reports a significant increase in ISW disposal since 2009 while MMSW has remained constant, leading the agency to believe that much of the increase in ISW contains MMSW that could be removed from the landfilling stream and recycled or otherwise reprocessed.

To deal with the issue, the MPCA proposes to elevate taxes on ISW to equal that of MMSW – from the current $0.60-per-cubic-yard cost to 17-percent of the overall hauler bill. This hypothetical project illustrates the significant impact this tax increase could impose:

Solid Waste removal taxes:
• A 25,000-square-foot office remodeling job may generate 300 cubic yards of waste at a cost of approximately $3,500 for disposal. Under the current tax rate of $0.60 per cubic yard, a $180 fee would need to be paid to the MPCA. But under the MPCA’s proposal, a 17-percent tax would be applied to the overall cost for disposal – a $600 fee would now need to be paid. This represents more than a 200-percent increase in solid waste disposal taxes.

Contaminated soil removal taxes:
• A medium-sized project might generate 25,000 cubic yards of contaminated soils, which could cost approximately $1,120,000 to remove. Under the current tax of $0.60 per cubic yard, a developer would have to pay $15,000 in fees. Under the proposed tax of 17 percent of the total cost, the developer would now have to pay $190,400 – an increase of more than 1,000 percent.

What We’re Doing
The NAIOP Minnesota Public Policy Committee is tackling this issue head-on by providing comments directly to the MPCA, asking them not to adopt their proposed tax increases, and volunteering to help improve recycling of construction waste as well as the redevelopment of sites with environmental contamination. But your voice in this issue can make a difference too. I urge you to get involved and let the MPCA commissioners know how you feel about such an unwarranted move.

What You Can Do
You must email your comments NO LATER THAN FRIDAY, SEPTEMBER 16 AT 5 P.M. Please send your thoughts to: johanna.kertesz@state.mn.us

For more background, here is a link to the MPCA report and proposal.

When you send your note, you may want to consider these points:

  • Developers in Minnesota are in the business of improving quality of life by improving our living environment.
    • Every project not only improves lives but also increases state and local tax bases
  • MPCA’s proposal would curb new developments, building renovations and urban infill projects.
    • Quality of life will begin to decline.
  • Construction jobs would be lost and cities would not enjoy a more robust redevelopment effort.
    • Blighted areas will simply remain blighted longer.
  • MPCA should consider methods to more accurately monitor and appropriately channel solid waste streams, not simply raise taxes.
    • Technology exists to accomplish this, and developers and waste haulers are willing to work with the MPCA to accomplish the mutual goal to recycle more.

If you send comments to the MPCA, please let me know by dropping me a quick note at quinn@naiopmn.org. As always, please feel free to contact me if you have any further questions on this issue or on how to submit comments.

Thank you.

-Quinn Cheney, Director of Public Policy

September 13, 2016 at 3:30 pm

MN Supreme Court agrees that a Tax is a Tax

We should all cheer when it comes to improving transparency in government, particularly when it comes to helping taxpayers understand their tax burdens. The Minnesota Supreme Court agrees, recently calling out the City of St. Paul on “fees” that should actually be defined as taxes.

This is good news, right? Well…taxpayers may foot the bill for the right result.

Two significant downtown St. Paul churches – The First Baptist Church of St. Paul and the Catholic Church of St. Mary – took the city to court over so-called “right-of-way assessments” that pay ordinary civic services such as street maintenance and lighting, arguing that the assessments were actually taxes. As tax-exempt organizations, neither church pays property taxes to local governments, although they are responsible for assessment for improvements that directly benefit their properties.

Minnesota Public Radio (ironically – a party to the case) recently reported on the MN Supreme Court’s ruling in favor of these plaintiffs click here for the MPR story. This isn’t small potatoes – as Tim Nelson reports, “The right-of-way assessment now amounts to nearly $30 million a year, compared to a total property tax bill across the city of about $100 million, according to city finance director Todd Hurley.”

So, how do you suppose the city will make up for a possible $30 million shortfall in order to keep the streets free of snow and potholes filled, not to mention lighting the sidewalks at night? Well, MPR gave us the honest answer, for the story continues: “If the Minnesota Supreme Court decision dismantles the city’s street assessment system, tens of millions of dollars could be shifted back onto regular property tax payers and high-value properties, such as downtown office towers.”

This will not happen overnight, thankfully. The Supreme Court moved the case back to Ramsey County District Court, where the City will have another shot at proving the unique value of the street assessment to the affected properties. In the meantime, the City will continue to collect the fees.

We at NAIOP Minnesota will stay tuned to this issue. We applaud any court decision that makes taxes more transparent. However, with municipalities across the state watching this issue very closely, we must be careful avoid further increases our already too-high property taxes to fund basic governmental services.

 

– Quinn Cheney, Director of Public Policy

August 26, 2016 at 8:41 am

Recap | A Closer Look: Construction Prefabrication

By Cameron Snyder, Mortenson

The future is here. The rapid evolution of technology is taking design and construction well beyond what was possible 10 years ago and it’s helping contractors deliver projects with improved schedules and cost certainty. One such area where technology is enabling innovation is in prefabrication (prefab). Originating more than a century ago, the idea of modularized or prefabricated components in construction is not new. However, advancements in Building Information Modeling (BIM) are allowing for more precise, seamless application in commercial construction projects in order to realize quantifiable gains.

Last month at M.A. Mortenson Company in Golden Valley, NAIOP attendees learned about the current state of construction prefabrication, its benefits, and why use is growing in commercial projects. Tom Schmall, general manager, and Taylor Cupp, senior integrated construction coordinator, from Mortenson presented information on the company’s 15-plus year experience with multi-trade prefabrication. Mortenson is currently using prefab in several projects around the country including the Sanford Medical Center in Fargo, ND, which is scheduled for completion in 2016.

In the past 10 years, the decision to utilize prefabricated versus site-built building components has gained a tremendous amount of attention in the construction industry. This shift in construction strategy can be attributed to BIM, project management philosophies like Lean Construction and further enhanced by new project delivery methods such as Integrated Project Delivery (IPD). These new tools and strategies have allowed the industry to implement proven methods that have effectively been used by other industries, particularly the manufacturing industry. Prefabrication has emerged as one of these methods that benefits construction projects, and the industry as a whole, by increasing efficiency and lowering total cost.

An ideal complement to traditional on-site construction practices, prefabrication (prefab) reduces the time of project delivery and total cost, while increasing the quality and scope of possibilities on a project. The practice of prefabrication in construction involves the off-site assembly of highly replicable components of a building – wall systems, bathroom pods, roof trusses, and exterior panels, among others – that are built in warehouses prior to shipping, delivery and installation in a project.  These items are typically time-intensive to build on-site during the normal course of construction.
Prefabrication provides an added assurance that each component is consistently assembled to the required level of quality while still meeting tight deadlines. Assembly of some of a project’s most complicated and critical elements in an off-site controlled environment reduces congestion of both personnel and materials at the site, and significantly reduces time spent “off the ground.”

SCL Health’s Saint Joseph Hospital, Denver
Often lauded as a safer, faster and leaner form of construction, prefab offers numerous benefits. One example came during Mortenson’s construction of SCL Health’s 360-patient-bed Saint Joseph Hospital in Denver, which opened in 2015. Healthcare projects, with the ability to reach a critical mass of repeating features, such as multi-trade above-ceiling racks, patient bathrooms and head walls, offer particularly good opportunities for a strong return on investment in prefabrication.

Mortenson was charged with building the 831,000-square-foot, 360-patient-bed hospital in 29.5 months. A traditional on-site linear approach would have resulted in a 36-month construction schedule, however through the application of prefabricated components, an 18 percent reduction in schedule was achieved. Prefabrication strategies allowed the project team to shave 72 days off the construction schedule along with $4.3M in indirect cost savings and reduced required labor by 29,500 hours. The hospital had one of the fastest-paced schedules ever achieved for this type of facility and was completed in late 2014. Mortenson published a study on the use of prefabrication, including results, which can be found online at www.mortenson.com/prefab-study.

Sanford Medical Center, Fargo
Located in Fargo, the new, still-under-construction Sanford Fargo Medical Center is taking shape. At one million square-feet, it is the seventh largest healthcare project in the United States and the largest commercial construction project ever in North Dakota. Prefabrication is being used to help offset the area’s extremely low unemployment in the trades and other project complexities by pre-manufacturing many replicable components.

One example of this is the application of prefabricated bathrooms. These modular bathroom “pods” include all the finishes down to the shower curtains and fixtures – the exact elements if the bathrooms were built on site. The pods arrive at the project completely assembled – built in Boston and Ohio and shipped via trailer – and are hoisted and rolled into place for final connection on site. This “plug-and-play” approach for the hospital’s 360 patient room restrooms plus 86 other single toilet restrooms is made possible through the use of BIM and early planning with design and trade partners.
“The process of construction continues to evolve,” said Taylor Cupp, senior integrated construction coordinator at Mortenson. “Integrated construction and the use of Building Information Modeling allows for increased communication, which helps with the speed of construction while enhancing the overall quality of buildings today.”

January 25, 2016 at 2:06 pm

July 23 event recap: More e-commerce means good news for developers

Dr. James Tompkins

Dr. James Tompkins

By Nancy Burke, Gray Plant Mooty

The titans are here and they are changing the landscape.  This was the message delivered by Dr. James Tompkins, chief executive officer of Tompkins International at the July 23 NAIOP Minnesota breakfast presentation. Dr. Tompkins is an international authority on supply chain management and a prolific author who is often quoted in business publications. With his extensive expertise in supply chain strategy, he shared a fascinating inside view on how the giants of e-commerce affect real estate development.

Dr. Tompkins’ key points included:

  • Titans like Walmart and e-Bay combine with our increasing desire for instant gratification and growing attachment to technology to disrupt the traditional marketplace. Our world is transforming from retail- based shopping at the mall to an e-commerce based “click and collect” experience with a demand for same day delivery. This creates an evolution in distribution and warehousing.
  • The rise of e-commerce means the end of the era dominated by distant warehouse centers designed to deliver bulk packages to retail locations.  These warehouse centers are being replaced by more locally-based fulfillment spaces designed to move individual units of product fast.
  • The Minneapolis/St. Paul metropolitan area is well positioned to experience more growth in fulfillment-focused warehousing.  The good news is that an e-retailer establishing a network in the United States will likely want space in or close to the MSP market once it grows to six or more fulfillment centers.  This creates a great opportunity for development of warehouse space in our market.

NAIOP Minnesota extends a big thank you to Dr. Tompkins for sharing his insights along with his humorous accounts of his own family’s evolution in shopping habits and expectations.

August 6, 2014 at 2:51 pm

Give NAIOP Three: News Video (July 2014)

This edition features:
Economic Impact Study, Strategic Plan, Legislative Activity

Check out NAIOP’s inaugural episode of “Give NAIOP Three” – a news update on what’s happening in NAIOP and commercial real estate.

July 31, 2014 at 3:01 pm

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