04-09-2018 Council Work Session Packet

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Mr. Eric Zweber WSB & Associates, Inc. December 19, 2017 Page 60 • Office: An office building with a build -to -suit tenant would be an excellent land use for several of the identified sites. However, this will be predicated on the ability to secure a single tenant who will commit to a built -to -suit office structure. The multi -tenant office market continues to be very soft with high vacancies and with rents that cannot support new construction costs. The office market continues to be the soft spot in the Twin Cit- ies commercial real estate market and that is likely to continue in the short-term as companies squeeze square footages and more employees work remotely. Since the of- fice market is the weakest commercial real estate product type in the Metro Area; office space will be more challenging to develop in Navarre unless a single -tenant user seeks out new construction. • Hospitality: The Twin Cities is experiencing a major building boom in the hospitality sec- tor due to a variety of conditions: 2018 Super Bowl, future Final Four, and improved economic conditions. However, with all the new supply occupancies have peaked and the hotel market is at equilibrium. If a site had lake access a small, boutique hotel could be considered in Navarre; however, since a lake site is unavailable we do not recom- mend a hotel concept at any of the identified locations. • For -Sale Townhomes: Because townhomes require a lower density than traditional mul- tifamily housing; most of the sites would not be well-suited for townhomes. Townhome land costs are usually lower than other multifamily densities hence the financial return on townhomes would be lower than other housing types located in multi -story con- cepts. However, the site just north of the fire station would make an excellent location for for -sale housing — either a townhome, twinhome, or villa style concept. The site would be well-received for a for -sale housing concept. Based on the site acreage of about 4.6 sites; this site may be able to accommodate upwards of 35 to 45 attached townhome units. • For -Sale Condominiums: The condominium market is ripe for new development as the market was hit hard from the recession and from the lack of new construction from the state law governing condominium development. However, this past year the Minnesota Legislature recently modified the condominium state statute that is resulting in condo- minium developers looking to re-enter the market. New condo construction has fo- cused on the upper -end of the market in Downtown Wayzata and Downtown Minneap- olis. Condominiums in Orono would be well-received and would provide an excellent product for existing residents to downsize from larger lake homes for maintenance -free living. As a result, we find a condominium development would be well-received in Na- varre and would serve a niche in the marketplace. Suburban condominium development should be able to support densities of about 20 to 30 units per acre. MAXFIELD RESEARCH AND CONSULTING, LLC