Region/MIDWEST Q: What opportunities have you found in the Midwest market?
A: The one that comes to our attention most often is plain, old-fashioned urban redevelopment, especially where there are surface parking lots or old buildings that are in need of new development as part of the city's attempt to revitalize a larger area. There is not a shortage of surface parking lots or underutilized buildings in the Midwest. We also look for historic rehab opportunities, but those tend to be more limited.
Q: How have Midwest downtowns been affected by the national housing slowdown?
A: In the Midwest, [most] cities have seen a measurable growth in their downtown population. Now, as the nation digests its housing stock, we will see a period of time when downtowns, like the suburbs, will slow. I believe it will take time—the next 24 months—to digest some of the downtown product mix. But I think that over the next 10 years, Midwest downtowns will continue to see the type of growth they saw in the beginning of the 2000s.
Q: What cool project is your firm working on now?
A: In downtown Des Moines, Iowa, we are redeveloping 160 acres, about 20 percent of the downtown area, into a new office park and housing. It's a $700 million redevelopment of an old steel manufacturing site with a variety of funding sources.
Q: What kind of success have you had using new market tax credits?
A: We have been using new market tax credits for three years, and do two or three projects a year with these credits. They are predominantly targeted toward commercial, but we've used them for hotels, brownfields, offices, and mixed-use projects. They are complicated, incredibly expensive to use, and [finite].nite] I wouldn't tell peopleldn't tell pl to rushh to make these credits part of their forte, but if you look at it as part of an overall basket of tools, these credits are one of many incentives you can bring to a project.
Q: Is it enough to understand the local markets you operate in?
A: Most people would say our expertise is in the financial side of putting together very complex urban redevelopment projects. That said, you need both a national knowledge of the financing markets and tools that make redevelopment possible, as well as a very regional understanding of the local community, marketplace, economy, and economic tools.
Q: Do you plan to expand into any new markets?
A: In the next five years, we are targeting Phoenix, Southern California, and Colorado. We are starting to build in those markets and will open up offices once we establish our foothold.
Q: What is your New Year's resolution?
A: To sell more houses.
About the Company
What: Housing and commercial developer focused on urban redevelopment
Founded: 1978
Headquarters: Minneapolis
Employees: 160
2007 revenue: $100 million (projected)
Units owned: 5,500 (as of Dec. 1)
Units managed: 5,000 (as of Dec. 1)
Geographic coverage: Minnesota, Iowa, Wisconsin, Missouri, and California
About the Project
Project: 311 Superior
Location: Duluth, Minn.
Units: 33 condos, 150 low-income apartments
Price: $300,000 to $900,000 (condos)
Notable: Condos are built on top of a 147-room Sheraton hotel; property is connected to nearby hospital via a skyway