The Rethinking the Office Market panel at the ULI Fall Meeting dovetailed nicely with an article I wrote for Urban Land in August about the office market. The takeaway quote of this panel is “we don’t need any more office space.” Those were the words uttered by Chris Macke, principal at General Equity Real Estate and presenter at Re-Thinking the Office Market. While that may be dire, admitting this may be the first step in the road to recovery. Phil Mahoney, Executive Vice President at Knight Frank indicated cost is secondary to value right now. “It’s more about my competitors and how I can recruit and keep the best employees.” Much of the discussion was on the media and tech industries, which have a strong presence in healthy markets like Silicon Valley and South of Market Street (SoMA) in San Francisco. Joaquin de Monet, President and CEO of Arden Realty, noted office space requirements have shrunk to just 105 square feet per employee some places. Part of this increased office density is open floorplans. It isn’t restricted to just the tech industry, said Phil Belling Managing Principal at LBA Realty, who noted AAA wanted an open, collaborative floorplan in their new office space. But it also has to do with economics, as companies have tried to cut expenses since the recession. Also worth noting is LEED has become much more commonplace in the past five years, and now is a requirement for a number of office users. Office environments must be exciting, collaborative and productive, and be located near transit and where people want to live. This is increasingly true among Gen Y, the fastest-growing portion of the workforce, according to John Kilroy, President and CEO of Kilroy Realty Corp. One unfortunate aspect of the session was all five panelists were well-versed in west coast markets, but there was no mention of market conditions elsewhere in the country, save for a glancing blow to Des Moines indicating developers may want to pass that market over. Yet, one could look past this and infer that those places where industry clusters have formed, as tech and media companies have in both the Silicon Valley and SoMA, for example, were healthy, very few other office markets are performing well. The U.S. has only gained back 14% of the jobs it shed during the recession. Combined with all the pressures of providing green and efficient offices with different layouts, and less net demand for space, office developers and investors have their work cut out for themselves in the coming years.

Everywhere you look, local food is a hot topic. Community gardens provide healthy food and a place for neighbors to meet. Popular restaurants, like the Wise Acre in Minneapolis, feature food sourced from a farm just 50 miles away. Farmers markets are everywhere, and food carts are a mobile option for budding restaurateurs to demonstrate their talent. The popularity of food and its source is driving real estate development in not-so-subtle ways. Here at the ULI Fall Meeting, a session entitled The Food Revolution and its Impacts on Real Estate discussed this topic. Chris Meany, a partner at Wilson Meany Sullivan LLC, helped develop the Ferry Building in San Francisco. Today, the Ferry Building is one of the five most visited places in San Francisco. Retailers boast sales of $1,250 per square foot. Furthermore, the days the farmers market is held are the days the indoor retailers do their best business. Meany credits this success to the uniqueness and local flare of the food vendors in the Ferry Building. They are one-of-a-kind and often with local sourcing, and thus very popular. Wilson Meany Sullivan is also on the team to redevelop Treasure Island. As part of that plan, 20 of the 200 acres of open space/parkland will be dedicated to agriculture, in partnership with local farmers who will help grow greens for the residents of the island. On the Hawaiian island of Kauai, DMB Associates has developed Kukui’ula, a resort community with a twist. Although it has many of the things on the list of resort community amenities, including a golf course, spa, club and mixed-use village, Kukui’ula offers a farm. Brent Harrington, Senior Vice President of DMB, explained that as a developer they realized potential buyers were interested in their health, and providing local food could accomplish this. Residents are free to gather and pick fruits, vegetables, herbs and tropical flowers. In addition, they offer farm-to-table dinners, and a weekly culinary market and farmers market in the mixed-use village. It has been a rousing success, and, like the Ferry Building, the day of the farmers market is the highest revenue day for retailers in the mixed-use village. I think I'll pack my bags for Hawaii. Sibella Kraus, president and director of Sustainable Agriculture Education (SAGE), discussed the many ways in which local food can be had, including food policy councils, farmers markets, community gardens, hobby farms, and food hubs. She noted that we eat every day, so it only makes sense that we care about getting food from as close as possible. She noted that communities are including food and agriculture in their comprehensive plans, as a means of sourcing local food and creating green buffers and open space. With regard to sustainable development, she pointed that we are building net-zero energy projects, why not build net-zero food projects? Food for thought indeed! You can read more about the ULI 2011 Fall Meeting here, and also follow the fall meeting on Twitter.

I have searched the world to find the perfect neighborhood, and perhaps I need look no further than the Highland neighborhood in St. Paul, less than three miles from my home. Is it really perfect? Of course not, but I once lived there and now spend a lot of time shopping and eating there. So I can speak from experience that I believe it offers the right blend of housing, retail, jobs, civic space and transportation options, all in a relatively pleasant walkable setting. And on a recent visit, I took my camera to try and document what it looks like and how it functions. View the slideshow here. In other words, Highland is a complete, connected neighborhood, and sets the minimum standard for any city or developer to measure what a proposed neighborhood should look and function. No new neighborhood anywhere should have wider or faster roads, narrower sidewalks, less transit service, fewer housing choices, more separated uses, less connectivity or fewer civic amenities than Highland. Sorry for the double-negatives - Highland deserves to be replicated or improved upon everywhere. If only it were so easy! LEED-ND is the closest metric we have to measure what a complete neighborhood is. This is valuable. We must find ways to create more complete places with a range of housing, retail and commercial in a walkable, transit-served setting. My friend and colleague Brendan Slotterback has some very good insights as to what areas of the Twin Cities can even host a LEED-ND project. Check out his work at Net Density. I'll let him and the other LEED professionals quantify the ratings system. I want to show what a complete, sustainable neighborhood feels like. The Highland neighborhood of St. Paul does just that. It all started 12 years ago when I lived (and shopped and ate and played and hung out) in Highland. I was strolling around, window shopping and enjoying the evening when I came upon some teenagers hanging out next to the kiosk at the corner of Ford Parkway and Cleveland Avenue. They were hanging out. I didn't know too much at that time about cities, but I knew enough that most new suburbs being developed at the time didn't have many places for teenagers to hang out, much less be able to reach that place without getting a ride from mom and dad. But here they were, having arrived on foot, and feeling every bit like they had a right to be there as anybody else. It slowly dawned on me that Highland was a pretty diverse place, at least in terms of age. Little old ladies could visit the Lunds grocery store and converse with fellow retirees. People of all ages could visit the library, grab a bite, shop or catch a movie, and could do so on foot, by car, bike or transit. If only everyone could live in such a place! As I mentioned, I still live nearby, and often visit for shopping or dining myself. Despite a few blemishes, it is a very attractive, busy, approachable neighborhood that is equally accessible on foot or by car. There is much to do. There is a mix of housing styles, a grocery store, pharmacies, banks, two bookstores, a theater, restaurants, coffee shops, gifts, bars, a library and park, health clinics, churches and synagogues. There are places to sit and stroll. People of all ages feel at home here. Perhaps most importantly, it is used and loved. It wasn't designed specifically to be this way, but rather has evolved over time. Sure, you can argue it was developed in an era when this sort of mixed-use walkable neighborhood was possible, but that is a cop-out. We know how to do this, and no combination of zoning, financing and road standards should prevent us from setting this development standard as a minimum standard in the future.

[caption id="attachment_1032" align="alignright" width="300" caption="Bar in Historic Grain Belt Office Building"][/caption]The Northeaster newspaper has reported that the Sheridan Neighborhood Association in northeast Minneapolis has indicated their preferred development team for redevelopment of a parcel and final historic building on the historic Grain Belt Brewery complex in northeast Minneapolis. That is good news, as I was part of the Diversified Equities team proposing 125 market rate apartment units, a public plaza and event center. The apartments will be located in a new building, while the event center and possible retail use will be in the historic Grain Belt office building. I provided the market study for the proposal, which found strong conditions in the marketplace for market rate apartments. More thorny issues for the team included maintaining a view corridor through the site of the historic brewhouse across the street, minimizing on-site parking while ensuring proposed uses were viable, dealing with shallow bedrock and water table and a moderate grade chage across the site, and maximizing the public benefit of the proposed plaza while providing a return on investment for the developer and city. I was a big proponent of ensuring the public realm was attractive, including an attractive public plaza in the shadow of the historic brewhouse and ground floor units with walk-up entrances. Perhaps most exciting is the plan for an event center in the historic office building of the site, which could accomodate small and medium-sized groups. More exciting to me is the Friendship Room in the lower level, with its Grain Belt bar, intact and in good condition. Beer tastings used to occur in this Rathskellar, and I can easily envision it being used again for events. Painted in the woodwork next to the Grain Belt logo is "Bier and brot macht die wangen rot," which is German for "Beer and bread make the cheeks red." A little sliver of historic Minneapolis, still preserved for now. Let's hope the city council agrees with the Sheridan Neighborhood Organization, and a good development agreement and financing package can be hammered out. Apartments will bring more residents and retail demand to the area, and the event center will bring more visitors who deserve to share this little slice of history, or just some beer and bread!

I'm happy to say the owners of the proposed Smokehouse Brewpub have raised the necessary funding to move ahead with financing for the restaurant. They managed to raise $200,000 from the community, more than the $150,000 they originally targeted! So they are still on track to open next spring. Mmmm, I can taste the beer and smoked meats already....