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Large developments throughout the region illustrate overall growth

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FARGO - It is no secret that the Bakken region of North Dakota is a hotbed of real estate development activity. But communities throughout the Dakotas and western Minnesota are experiencing their own building booms, thanks to a variety of reasons including prosperous agriculture economies and growing populations. Included below is an overview of some of the most interesting projects taking place in the area.

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Sioux Falls, S.D.

According to Ron Bell, chief building official for the city of Sioux Falls building permits issued from January through July this year totaled 4,516 -- the fourth busiest year in the city's history in terms of permit numbers. The city experienced an "incredible surge in building activity" in the early part of the year but began to slow down in June, which Bell says is understandable given the high rate of activity early in the year. Nearly 90 percent of the building permits issued so far this year has been for residential projects, which is typical for the city.

After putting the project on hold for several years, Universal Properties LLC recently began work on an 80-acre residential and business development in northwest Sioux Falls dubbed University Hills Village. The company had hoped to begin construction in 2009, but tabled it due to the global recession. "We took it off the table with the slowing of the economy," says Danielle Merrow, broker and owner of Dynamic Real Estate LLC. "For the past year, we've been ramping up momentum on the project. There's a huge influx of interest in the northwest. We're really excited to be part of the growth of the area."

The first apartment building is scheduled to be complete next summer and will include 122 units. The entire project could include up to 10 apartment buildings, housing 1,500 people, when complete sometime within the next decade, according to the company. Single-family and multi-family homes are also planned as well as restaurants, shops and office spaces.

The city of Sioux Falls is also undertaking a massive development project and is nearing structural completion of the Denny Sanford PREMIER Center, also known as the Sioux Falls Events Center. When complete, the $117 million project will provide a state-of-the art facility for sporting events, concerts, conventions and other large gatherings. The center will be built to accommodate 12,000 people and will add 64,000 square feet to the existing facilities. The center is expected to be complete next fall.

Bemidji, Minn., area

Dave Hengel, executive director of Greater Bemidji, the economic development agency for the Bemidji area, says the city of Bemidji is experiencing a major surge in development activity along the city's south shore near the Sanford Events Center. More than $50 million will be invested in new developments in that area over the next 12 months and will include two hotels, a restaurant and a 40-unit townhome community, according to Hengel.

North of Bemidji, work is nearing completion on a $1.8 million clinic in Bagley, Minn., the result of a collaborative effort among Sanford Health, Greater Bemidji, the city of Bagley, TEAM Industries, the Headwaters Regional Development Commission, First National Bank Bemidji, Deerwood Bank, Riverwood Bank and Security Bank USA. Greater Bemidji will own the building and lease it to Sanford Health. TEAM Industries, an engineering and manufacturing firm with approximately 280 employees at its Bagley headquarters, donated $200,000 toward the land purchase and construction costs. The city provided tax-increment financing and loans while Headwaters Regional Development Commission and participating banks assisted with the project's financing.

Hengel says Greater Bemidji was willing to step in as owner of the new clinic building, which will be three times larger than the current clinic, because the clinic will contribute to the agency's goal of recruiting new businesses and talent to the region by providing quality healthcare and therefore also improving quality of life. "We are a fairly aggressive region, interested in driving development and creating prosperity for our region," he says. "If that entails constructing a building to support development, we will find a way. We are open to using non-traditional means to support development and ensure we are a very business-friendly region."

The new clinic is expected to open by winter.

Grand Forks

A number of new developments are being added in Grand Forks, particularly along the 42nd Street corridor, which runs parallel to Interstate 29 and provides access to the Alerus Center, the University of North Dakota and Altru Health System. Recent development projects include a 600-bed student housing facility and multiple hotels near the Alerus Center.

ICON Architectural Group has been very active in developing the corridor, serving as owner/developer of two large projects and championing a larger effort to transform the area into a destination center for students, visitors and local residents. The company recently completed the 42nd Street Square, a 15,000-square-foot, $3 million retail strip center, which will soon welcome its first tenant. The firm is also responsible for the 42nd Street Commons, a $2 million, mixed-use project which will include underground parking, commercial space and three floors of high-end apartments. The Commons is the third building on ICON's corporate campus. ICON and engineering firm AE2S are both headquartered in the Professional Services Building on the campus.

Mike Kuntz, a principal at ICON, says the overall vision for the corridor is to create a space that includes public art installations, an outdoor concert venue, a destination space that could be used for events such as markets and festivals, and low-density, mixed-use retail and housing developments. ICON and other proponents of the project are working with the city to plan those elements ahead of development in order to avoid doubling back afterward to design art features and parks. Kuntz has been instrumental in designing the initial plan for the corridor and says he was inspired by Omaha, Neb., which he says has been successful in spreading art throughout the city, resulting in a distinct feel that sets it apart from other Midwest cities. Grand Forks residents have called for more art and entertainment options to be added to the city and the plan for the corridor appears to be well-received to date, however it will likely be some time before the vision becomes a reality.

Building permit valuations were approaching last year's total by the end of July this year, according to city officials. In 2012, the city issued 1,506 permits for a total value of about $127.7 million. Between January and July this year, the city issued 903 permits, valued at nearly $126 million. City planner Brad Gengler says the multi-family residential market is the busiest it's been in over a decade. Among the developers active in that sector is Enclave Development, which recently broke ground on a $18.8 million, 141-unit master planned rental community known as Cottage Grove Apartments and Townhomes. A grand opening for the apartment phase of the project is expected in February. Enclave Development is also developing a 192-unit retirement community, dubbed Silver Waters, which is scheduled to open next July. The total project cost is $25 million, according to firm co-founder Austin Morris.

Fargo area

Development activity of all types is outpacing previous years throughout the Fargo metro area. From January through July, Fargo issued 1,457 building permits with a combined value of more than $204 million, approximately $46 million above last year's permit valuations for the same time period. "We're on a real busy pace," says Jim Gilmour, city planner.

Demand for all types of housing in the Fargo area has been strong throughout the year this year, resulting in a fast-paced housing development market. The city of Fargo issued more single-family, twin home and apartment unit permits during the first half of this year than the same time frame last year, and Gilmour says that trend will continue as developers hurry to meet continued demand. A quarterly report on apartment vacancies for the Fargo metro area during June, typically the slowest time of the year for apartment rentals, showed an overall vacancy factor of just 2.56 percent for 23,000 units. Lack of available units is being reflected in rental prices, which are increasing and will continue to go up until sufficient supply is introduced to the market, according to the report. Gilmour says there are currently more than 30,000 apartment units in Fargo and if demand continues at its current rate it could take two years of fast-paced development in order to bring the overall vacancy rate up to the acceptable 4 percent.

A number of new hotels and commercial spaces are also being developed throughout the metro area. In June, KAJ Hospitality broke ground on a 103-room Cambria Suites and a 15,000-square-foot conference center in West Fargo. The Cambria Suites West Fargo is expected to cost more than $17 million and will create 75 jobs at the hotel and convention center when complete next spring. The project is located along the 9th Street and Veterans Boulevard corridor, which is being rapidly developed. Nine of the top 20 permits in valuation issued by the city in 2012 were located along that corridor.

In Fargo, any remaining undeveloped lots along 45th Street near West Acres Mall are prime real estate. Several projects are planned for the area, including a $13 million, 60,000-square-foot retail strip mall dubbed Prairie Stone Center. The center is owned and developed by a new partnership between Rick Berg and Ace Brandt, two well-known names in real estate. Goldmark Schlossman Commercial Real Estate Services Inc. is the project's broker. As of mid-August, a groundbreaking for the center was scheduled for early September, with an anticipated completion date of next spring. Jim Buus, vice president of Goldmark Schlossman, says the center is being developed with an eye toward quick-serve restaurants, high-end retailers and service providers and women-centric health and wellness businesses. He expects the project will draw in national chains that are new to the area and higher-end businesses. "Due to the higher than average rent structure and the high-impact location we expect it to be upscale-types of retailers and service businesses," he says. A number of potential tenants had signed letters of intent by mid-August and Buus expected to begin completing lease agreements in the near future.

Bismarck

The city of Bismarck actually issued fewer permits in the first half of 2013 as compared to last year, but the valuation of permits issued is well above last year's. Nearly $232 million in permits were issued through July this year compared to about $156 million during the same time frame last year, according to the city. A wet spring is to blame for any slowdown in permits issued, according to city engineer Mel Bullinger, who says development activity is quite brisk, primarily on the north side of the city. A new elementary school and high school are planned for that area of the city and a number of large residential projects are expected to be developed near the schools, he says. Additionally, engineering firm KLJ is locating its new headquarters, an 80,000-square-foot facility, on the north side of Bismarck.

Brian Ritter, acting executive director of the Bismarck-Mandan Development Association, says that overall development activity has definitely increased over the past year. "We're fortunate in that we have a dynamic, diverse economy that features strong government, medical and energy sectors while also benefitting from activity in the Bakken and agriculture," he says. Included on the list of large projects is a redevelopment project downtown which will convert a city block into a three-story mixed use space for restaurants, offices and residential condominiums. Ritter says the project, called Broadway Centre, is believed to be the first of its kind in Bismarck. A new Walmart Supercenter in Mandan has spurred additional developments in the surrounding area, including a new hotel, office spaces and eateries, he says. A number of public projects are also underway, including a $13 million parking ramp in downtown Bismarck, a $27 million expansion to the Bismarck Civic Center, and a more than $40 million expansion at the North Dakota Heritage Center. "Needless to say, we're very excited about Bismarck-Mandan's future," Ritter says."

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