St.Paul Is Growing, and so is the Battle between Residential and Office Space
As our Twin Cities expand, so too does our needs for space and specific services in our cities. The constant battle between the types of property spaces and the services they provide are in full effect in St.Paul specifically. St.Paul has been iconic for growth, as the population increase per year keeps rising, so too does the need for housing options. As a response to demands, there are concurrent risings in residential spaces, leaving people worried about spaces for businesses and work places.
In the last eight years alone, the residential population in St.Paul has nearly doubled, going from 4,900 to 9,500. This change in residential numbers has spurred the alteration of old business spaces into residential spaces, taking the possibilities away from new business fronts. However going along with this information, it has also been reported that while the number of storefronts is down, the space used for businesses is up. This odd pairing is because of specific businesses, like food places, have a tendency to take up more room than most storefronts, remaining on being the bright spots for tourists and locals.
There is a bit of a tear in the residents of St.Paul as some are ecstatic at the fast growth in their city, while others suggest a revamp of office spaces and businesses in order to accommodate multiple forms of offices and businesses in one building.
Welcoming ResidentsThe St.Paul Building Owners and Managers Association recently released it's "Downtown St.Paul DataSource report" on Monday October 22nd, which has sparked the voicing of praise and concern in unison. The report states the number of people living in the "Central Business District" as 4,862 from 2010 to 9,457 as of August 2018 which is a 95% increase. Since last year alone, 500 people have become residents of the Central Business District. One of the main variable in this growth is the increase in new apartments, resulting in an added 2,328 apartments in the last eight years. While this is alot, it still is not enough to satisfy the demands of the current market. While the Twin Cities is a hot market for apartments and shows no signs of slowing, there is a stark contrast in country areas which seem to be softening in demands. Developers are taking old and weathered office and retail spaces that started off as "Class B" or "Class C" spaces, and converting them into high-end apartments as a means for satisfying the demands of population growth. Currently the main kinds of buildings being revamped are art studios, retail and office buildings like Jax Building, Park Square Court, and the east tower of the First National Bank building. All of the aforementioned are being redeveloped into mostly residential spaces or hotel components.
Office Spaces Becoming SparseAs mentioned before, there is concern about office space fading away in relation to the increased residential options. However the report states otherwise, saying that there is an occupancy rate of 92% which included competitive, government, and owner-occupied office space. Many believe that the untapped potential lies in the creation of flexible, higher-end office environments that will allow for expansion to startup companies, mid-level software developers, and major employers. Most are questioning the reality of leaving the currently unused 'B' and 'C' office space alone, as they think it would continue to go unused and serve as a waste of potential. Some development partners have taken hold of this notion and converted an Ecolab tower into a multi-business tower. Another developer has taken a long overdue department store and started an ambitious renovation that is planning to estimate around 50,000 square feet of high-end office and co-working space.
St.Paul's EvolutionWhile there is a lot of energy moving in St.Paul, this change in residential and office space will allow for opportunities with those of you who are looking to sell unused property. As the city looks for more locations that can be converted to high-end properties, that means the potential value in currently ranked 'B' and 'C' property is a bit higher than usual as the demand is going up. It would be wise to invest in the re-purposing of these properties to stay ahead of the down curve that is inevitable once the demand is finally met for both residential space and office space. What do you think about the course St.Paul is on? Do you think this growth is too quick, or not quick enough? Give us a call and let us know! While your at it, let's build a portfolio of options that will let you take advantage of this change in the city, to keep you ahead of the curve!
Kontor Realty Group
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