Construction has begun on Junction Flats, a six-story, 182-unit luxury apartment building in downtown Minneapolis located near Target Field and a major transit hub. The 240,000-square-foot building is being developed by High Street Residential, a Trammell Crow Co. subsidiary, in partnership with The Carlyle Group.

The cost of the development and the amount of the equity invested by The Carlyle Group, a global alternative asset manager, were not made public. The Carlyle Group is using equity from Carlyle Realty Partners VI, a $2.34 billion fund that targets opportunistic real estate investments in North America.

“Junction Flats is located just northwest of the central business district in the North Loop, a vibrant community that offers residents a unique experience and a wide range of destinations, including entertainment venues, fine dining and specialty shops,” Grady Hamilton, principal & head of Trammell Crow’s Midwest Business Unit, said in a news release. “We have excellent partners and are pleased to be moving forward with such a unique development in the heart of the North Loop.”

“This has all the makings of a great development, a vibrant city with a strong local economy, solid supply-demand fundamentals, convenient transit options and a trusted partner in Trammell Crow Company,” added Tom Levy, a Carlyle principal.

The project is being billed as a “transit-oriented development.” The site is near I-94 and I-394 and The Interchange, a multi-modal transit hub expected to be completed next year and serve an estimated 22,000 people a day.

Located on 1.37 acres in a downtown area known as the North Loop, Junction Flats will feature studio, one- and two-bedroom units and live/work units. It will have nine-foot ceilings, balconies and patios and upgraded appliances. Other amenities include a clubroom, pool deck, fitness center, dog-wash station, bicycle storage, business center and Wi-Fi coffee lounge and a covered heated parking garage.

Junction Flats should be completed by summer 2014. It will join several other new multi-family communities under development in Minneapolis and its nearby suburbs as a strong economy is driving the rental market. Trammell Crow said last week it is teaming with another partner, Investment Real Estate Properties to develop a six-story, 260,000-square-foot multi-family project known as Arcata in the suburb of Golden Valley, Minn. Construction is expected to start soon on the development located about a 10-minute drive from downtown Minneapolis. ESG Architects, also the lead architect for Junction Flats, is the lead architect for Arcata, which will have 165 luxury units.

Employment is expected to rise nearly 3 percent in the Minneapolis area this year and is boosting the demand for rental apartments, according to the Marcus & Millichap ApartmentResearch Market Report for the second quarter. The report said the Minneapolis-St. Paul area has the second-lowest multi-family vacancy rate in the nation. It is expected to be 4 percent this year, up 80 basis points due primarily to the construction of new properties.

“Construction is already at an eight-year high and the list of planned projects continues to expand,” the report noted.

Developers are expected to deliver about 3,400 units of market rate, affordable and student housing in 2013, a 1.3 percent rise in inventory, according to Marcus & Millichap. The report said 1,200 apartments have hit the market in the past 12 months, including about 364 finished in the first quarter of 2013. The pace is expected to continue because more than 6,400 multi-family building permits were issued in the last 12 months, up 32 percent year-over-year, the report stated.

Minneapolis is also the site of a $400 million mixed-use development by Ryan Cos. for a site adjacent to the new Vikings stadium planned for the city’s Downtown East neighborhood. It is expected to have 1 million square feet of office space, 40,000 square feet of retail and more than 300 residential units and be completed by summer 2016.

180 Brisbane

Japanese developer Daisho Group has recently broken ground on a $300 million office tower in Brisbane, the capital and most populous city in the Australian state of Queensland.

According to Architecture & Design, the 34-story commercial project will bring the first speculative high-rise on the city’s skyline since the start of the global financial crisis. Colliers International and Knight Frank are the project’s leasing agents.

“As Watpac begins principal construction works, local and interstate companies are showing keen interest in becoming tenants of 180 Brisbane when it is completed in late 2015. These include mining and resource companies, professional service firms and others looking to establish or expand their presence in the Brisbane CBD,” said Yasuo Iwasaki, Daisho Group’s general manager.

Designed by Crone Partners, the new building at 180 Ann St. will offer approximately 630,000 square feet of space, including large floor plans, ground floor retail, a food court, an on-site management office and basement parking. Amenities also include direct escalator access off Ann Street, extensive landscaping, generous lounge and meeting spaces, secured bicycle storage, along with jogger and cyclist changing rooms, showers and lockers.

One of the most notable architectural features of the 180 Brisbane tower will consist of a distinctive river-shaped graphic wrapped around the building’s façade.

The project aims to achieve a 6 Star Green Star and 5.5 Star NABERS rating. Environmentally sustainable design features include reduced water and energy consumption, increased levels of fresh air, as well as a creative use of glass that maximizes natural lighting inside the building.

“Daisho has owned 192 Ann St. since 2001 and 180 Brisbane will be another high-quality addition to the city and Daisho’s long-term investment here. It will also rejuvenate the CBD by forming a new hub. which links key parts of the city’s center,” Iwasaki added.

Headquartered in Japan, Daisho Group is an international property developer with offices in Malaysia and Brisbane. Since it was founded in 1986, the company has amassed a portfolio currently valued at more than $1.5 billion.

Mill Creek Residential Trust, of Dallas, will hold a groundbreaking ceremony in Morristown, N.J., today for the 268-unit first phase of Latitude, a luxury apartment development. The project reportedly is the first large-scale residential development to be undertaken in Morristown in almost four years. The building’s cost has not been disclosed.

The 258,300-square-foot first phase will comprise studio and one-, two- and three-bedroom rental homes and a 350-space parking garage incorporated into the structure. The project’s location, at Early Street and Speedwell Avenue, is walking distance from downtown Morristown.

Apartments will feature 9-foot ceilings, walk-in closets, patios/balconies (in select residences), lofts (in select residences), washers and dryers, granite countertops and energy-efficient stainless-steel appliances. Amenities planned for Latitude include a fitness center outfitted for cardio, strength, spin and yoga; a rooftop deck; lounge with fireplace; business center; and game room.

Despite the community’s upscale nature, 26 deed-restricted, affordable rental apartments also will be part of the first phase.

Initial occupancy for Latitude is planned for next year.

The project’s second and third phases will add more residential units, as well as non-residential uses, both designed to blend with the existing architecture along Speedwell Avenue, Rich Murphy, managing director with Mill Creek, told Commercial Property Executive.

Latitude is roughly half a mile from the Morristown station on New Jersey Transit’s Morristown (Green) Line; commuter trains run from there to Hoboken Terminal or directly to New York’s Penn Station.

When the New Jersey Department of Transportation established its Transit Village Initiative in 1999, Morristown was one of the first municipalities to join.

The median age of Morristown’s approximately 18,500 residents is not quite 35, and one-third are foreign-born, according to the U.S. Census Bureau. The median household income is estimated at $62,600, though 13.2 percent of Morristown residents are below the poverty line.

Surging demand, new retail concepts and stirrings of new development were the talk of the Las Vegas Convention Center on Monday during the first day of RECon, the International Council of Shopping Centers’ annual spring convention. It is impossible to tell how many deals will emerge from the event, but as thousands of real estate professionals roamed the vast halls of the 3.5 million-square-foot facility, participants reported a sense of renewed optimism about the market.

“Going into the show, we have more meetings this year than last year,” said John Bacon, vice president of marketing with Cole Real Estate Investments. As of Monday morning, the firm’s acquisition team had scheduled about 240 meetings and the leasing team had about 110 meetings on the calendar. “Our leasing people were getting calls as late as Friday night” from attendees hoping to schedule meetings at the last minute, Bacon added.

Conversations with a variety of attendees revealed optimism fueled by stepped-up interest in investment sales, leasing and development. “The net-lease industry as a whole is hot,” said Stan Johnson Co. managing director Harold Briggs Monday morning at the firm’s booth in the convention center’s south hall. The company’s net-lease retail transaction volume posted a 50 percent year-over-year increase during the first quarter, outperforming the company’s office and industrial sales growth by a considerable margin. One noteworthy net-lease retail trend is the participation of institutional investors, particularly in the $50 million to $100 million range, Briggs reported. “You’ll see five or six institutional buyers compete for portfolios of 15 to 20 assets,” he said.

Owners exhibiting at the show confirmed on Monday that renewed tenant interest is pushing them to adjust their tactics. Scott Prigge, senior vice president of property operations for Regency Centers Corp., said that pet supply stores, fitness centers and fast-casual restaurants are leading the way. Quick-Service restaurants, said Prigge, “can’t get enough space.”

Underscoring his point, a variety of fast-casual restaurant brands like Subway, Smashburger and Jersey Mike’s are using RECon as a bully pulpit to bring attention to their expansion programs and identify suitable space for new locations. Demand for space in desirable locations has improved to the point that Regency aims to backfill a vacant space with the best possible tenant. This year the company is also rolling out a company-wide campaign to review best practice in customer service.

Other restaurant niches besides are commanding the attention of RECon attendees. Chef-driven restaurants are catching on, especially as part of redevelopment in core urban areas that appeal to members of Generation X and Generation Y, according to James McCandless, director of retail for Streetsense, a diversified Bethesda, Md.-based consulting, design and development firm that is a member of the X Team network of service providers and consultants. Another X Team member, Legend Retail Partners, recently rolled out its new Urban Legend affiliate in an effort to tap into the growing chef-driven restaurant market, reported Legend partner David Larson.

Institutional real estate fund manager Paladin Realty Partners L.L.C. continues to answer the cry for multi-family housing accommodations in Brazil, with the closing of an investment in a homebuilding partnership with Construtora Altana. Through the $60 million joint venture, A-PIMA II, the partners envision building approximately 2,400 condominium units for low- and lower/middle-income buyers in São Paulo. 

Paladin financed its investment in A-PIMA II through its fourth Latin America-focused institutional fund, which recently attracted a $100 million commitment from the board of the Overseas Private Investment Corp. 

The partners have already gotten the green light for the fund’s first project. There’s every reason not to dawdle. “Growth in demand for low- and middle-income housing is far outpacing pace of new supply,” Fred Gortner, a managing director with Paladin, told Commercial Property Executive. “As a result, the housing deficit in the country is growing, not shrinking.”

A-PIMA II marks the second go-round for Paladin and Altana. The two companies first joined forces in 2009 on the inaugural A-PIMA platform, which yielded 3,171 low- and lower/middle-income units in eight residential projects, including La Dolce Vita (pictured), and revenue totaling in excess of $250 million.

Paladin and Altana anticipate generating roughly $250 million in sales through A-PIMA II as well, despite the growing number of multi-family development activity in the area. It’s all about demand.

“Demographic trends supporting strong housing fundamentals–most notably, a declining dependency ratio as their ‘baby boomers’ continue to enter  the workforce–will last for another decade,” Gortner said.

And it’s not just São Paulo that’s on Paladin’s radar. “Brazil has over two dozen cities with populations of over one million people [and] Paladin has been active in over a half dozen of these markets,” he added. “All are ripe for housing development.”

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By Suzann D. Silverman, Editorial Director

Can apartments be too small? Developers are testing the boundaries, experimenting with layout and design to determine just how tiny and inexpensive a space they can easily lease. During the Urban Land Institute’s Spring Meeting last week, Kauri Investments Ltd. chairman James Potter and AREA Real Estate L.L.C. principal David Adelman offered some creative configuration ideas that are attracting not just Gen Y programmers seeking to live near their Silicon Valley jobs but even empty nesters in search of close-in urban locations in San Antonio. Either group may use the units as their sole residence or maintain a larger, perhaps weekend-only additional home farther from the city. What makes these renters different from those who prefer more space, Potter noted, is their even greater focus on price point.

Over the past four to five years, Potter has been striving for increasingly smaller units. With eight projects currently under development, he has achieved an average size of 100 to 200 square feet. So far focused on smaller buildings with a limited number of units, his latest, in downtown Oakland, Calif., is situated on a 40-by-100-foot site and includes six to eight “bedrooms” and a kitchen.

Potter achieves such small unit sizes by considering what can be removed from the unit. A central kitchen, for instance, can be a big space saver, since people are not cooking to the extent they used to, he noted. Having discovered that a shared refrigerator does not make for good neighbors, he includes a small model in each unit, plus a sink (not a “kitchen sink” or a “bathroom sink”—just a sink, said the developer, who maintains that putting labels on the properties or their contents complicates their image). Residents must supply their own dishes, eating utensils and linens, but the central kitchen includes pots and pans and cooking utensils. Residents can collaborate on any herbs or spices they want to share. The units are fully furnished—there is only room for a bed, table and chair—and include utilities and Internet access. A central bathroom—dormitory style—can also help reduce the unit size.

Adelman’s initial micro-apartment units are not nearly as small. His San Antonio property 12WELVE 2WENTY1, at 1221 Broadway, offers a mix of “loft apartments,” the smallest of which is 456 square feet and rents for $725. He is currently planning to renovate 606 Avenue B to produce 113 units in three sizes: one-bedroom units with 614 square feet, studios with 514 square feet and micro-units with 380 square feet. The micro units, which will comprise 10 percent of the total, will include “almost no kitchen,” whereas the larger micro units in 12WELVE 2WENTY1 include galley kitchens with minimal furnishings to provide flexibility. “The more you allow people to set up the way they want to, the more it will attract,” he maintained.

Potter noted that he is able to charge $200 to $400 per month for units by reducing his own costs. The units come with neither parking (in Oakland, only 15 to 20 percent of the property’s residents have cars, he said)nor amenities (people prefer to interact with their community, anyway). The leasing contract (currently generally 90 days, offering flexibility and a chance to learn more about these tenants, but he will produce a lease for as long as nine months) and monthly payments are all handled electronically. Potter provides laundry facilities in the building, and has experimented with card systems and free use but is avoiding coin operation, while Adelman will help residents arrange for a local company to install a stacked washer and dryer in the unit on request.

Such units, the developers noted, have had no trouble attracting residents or financing from local community banks. Major banks—which might offer lower interest rates—have been more reluctant to embrace the concept, and municipalities’ responses have been mixed. For instance, Potter was rebuffed by San Francisco before heading across the bay to a more welcoming Oakland. Parking creates the biggest challenge, since municipalities are accustomed to requiring parking for their residents and homeowners can be leery of losing their own on-street parking alternatives to renters that have no other option. Although alleys, when present, can alleviate this concern, Potter suggested an agreement with an office building as another alternative, as businesses tend to popular their garages during the day while apartment residents are more likely to need them at night.

Look for an upcoming video interview with Potter and Adelman for more insights into their experiences with micro units.

Wyndham Hotel Group announced plans to open the first Wyndham Hotels & Resorts property in the United Arab Emirates after signing an agreement with Sigma III Limited, a subsidiary of British-owned developer The First Group, to manage its 33-story building in the Dubai Marina.

The Wyndham Dubai Marina is currently under development and is expected to open in the next three years. The hotel will feature 497 guest rooms, including 251 luxury suites. The Wyndham Dubai Marina will also include close to 6,800 square feet of food and beverage outlets, including a coffee shop, an executive lounge and a bar, all-day dining and specialty restaurants. The hotel, besides the meetings and conference space, will also offer almost 2,500 square feet of spa and leisure facilities which will include a gym and outdoor pool with a pool bar.

“We’re very excited to be bringing our namesake Wyndham Hotels and Resorts brand to Dubai, following its successful introduction to the region through the spectacular Wyndham Grand Regency Doha,” said Eric Danziger, Wyndham Hotel Group president &CEO.  “I have no doubt that Wyndham Dubai Marina will be another superb addition to the brand, which we are already growing in key cities throughout the Middle East.”

In the Middle East, Wyndham Hotel Group has opened the Wyndham Grand Regency Doha in 2011 and has already announced the development of two Wyndham Hotels and Resorts properties: the Wyndham Grand Manama and Wyndham Grand Riyadh. Both properties are expected to open by the end of next summer.

“We are delighted to have Wyndham Hotel Group on board and are certain this partnership will be a huge success,” said Gary Shepherd, co-founder and joint chairman of The First Group. “Wyndham Dubai Marina adds to our dynamic portfolio of hotel projects across the U.A.E. and Africa and we look forward to watching this stunning project take shape.”

Backed by a $660 million loan from a London investment fund, Silverstein Properties said it will begin construction this fall on a $950 million, 82-story skyscraper in Downtown Manhattan that will comprise a 185-room Four Seasons hotel and 157 luxury condos.

At 926 feet, it will be the tallest residential building in Downtown Manhattan and one of the tallest buildings in New York City. Located at Park Place and Church Street in Tribeca, the Four Seasons Hotel and Private Residences New York, Downtown, is expected to open by 2016. Now being called 30 Park Place, the site is the former Moody’s headquarters then known as 99 Church St. Silverstein Properties and the California State Teachers’ Retirement System (CalSTRS) bought the site from Moody’s in 2007. Silverstein unveiled plans for the hotel-condo project in January 2008 during an update on rebuilding efforts at the nearby World Trade Center site. But plans were put on hold following the fiscal downturn that started several months later causing credit markets to freeze.

Five years later, the project is moving ahead now that the financing has been secured from The Children’s Investment Fund Management L.L.P. of London.

“This project perfectly fits our investment strategy in New York City, which includes other high- end residential projects such as 432 Park Ave. and 737 Park Ave.,” Martin Frass-Ehrfeld, partner at TCIF, said in a news release. He said the fund was excited “to provide financing to a pristine group of partners.”

Larry Silverstein, president & CEO of Silverstein Properties, Inc., said the new tower will become a new and distinct landmark in the city’s skyline.

“It will join and enhance a world-class neighborhood that is already home to a dynamic blend of modern office towers, private residences, high-end retail and dazzling public spaces,” he said in the statement. “Downtown is fast becoming a vibrant, integrated, mixed-use destination on a scale not seen in New York City since Rockefeller Center in 1939.”

Robert A.M. Stern Architects is designing the building and the private residence floor plans and interiors. Yabu Pushelberg is designing the hotel interiors. SLCE Architects is the Architect-of-Record. Tishman Construction is the general contractor. The firm, which built 7 World Trade Center for Silverstein Properties in 2006, is also the general contractor for 3 and 4 World Trade Center. Corcoran Sunshine Marketing Group expects to begin marketing and selling the condos in spring 2014.

“We are thrilled that the project at 99 Church is slated to go forward and contribute to the tremendous growth in Lower Manhattan’s hospitality industry,” a spokesperson for the Alliance for Downtown New York, told Commercial Property Executive. “As the buildings at the World Trade Center site come online and major tenants, including Conde Nast, open their doors in Lower Manhattan, this hotel and others will serve as a huge draw to the city’s leisure and business travelers.”

Before 9/11, there were six hotels in the area. There are now 18 and the number of hotel rooms has grown by 78 percent to 4,100, the spokesperson noted, adding that there should be 23 hotels with more than 5,100 rooms south of Chambers Street by 2014.

The spokesperson added that the alliance partnered with NYC & Co. beginning two years ago to showcase the area’s recovery and revitalization. The international campaign urging visitors to stay in Lower Manhattan hotels and eat and shop in the area has been very successful.

When it opens, the Four Seasons will feature three floors of lobbies, lounges, a restaurant, ballrooms, meeting facilities, a spa, fitness center and pool. The hotel entrance will be on Barclay Street and there will be a second entrance to the restaurant on Church Street. The public rooms of the hotel will overlook a landscaped public plaza.

“Adding a second hotel to our existing iconic property in New York on 57^th Street, will be a great addition to the portfolio of the Four Seasons,”  Scott Woroch, executive vice president worldwide development, Four Season Hotels and Resorts, said in the news release.

Silverstein Properties and the Four Seasons are also teaming up in Orlando, Fla., where the world’s largest Four Seasons resort is under construction on the northeast portion of Disney World. The 445-room luxury resort is expected to open in July 2014.

Pan Pacific Hotels and Resorts’ newest location, the Pan Pacific Serviced Suites Beach Road in Singapore, made its debut on May 7. The 180-key extended-stay luxury property represents the company’s fourth Singapore location and its second Serviced Suites-brand hotel in the country, following the 120-key Pan Pacific Serviced Suites Orchard, which opened in 2008.

Located on Beach Road, the $81 million asset is in close proximity to the Marina Bay Central Business District as well as the Haji Lane and Arab Street cultural districts. The Raffles Place business district and the Clarke Quay and Boat Quay entertainment district are both nearby. The Bugis and Nicoll Highway stations on Singapore’s Mass Rapid Transit system are a short walk from the property.

Pan Pacific is aiming to combine high-end hotel features with the comfort of a private residence. Amenities include a fully-equipped fitness center, rooftop swimming pool as well as made-to-order breakfasts on weekdays. Other lifestyle amenities include the Pacific Lounge and Living Room, complete with gaming corner equipped with Xbox console as well as a library.

Available in 484-square-foot and 710-square-foot layouts, guest rooms feature two LCD televisions, laundry facilities, full-service kitchenettes, high-speed Wi-Fi, as well as wired internet service and an audio system complete with docking station. Business amenities include meeting space, parking facilities, complimentary Wi-Fi and complimentary shuttle service to Singapore’s business districts.

In addition to the two Serviced Suites properties, Pan Pacific’s Singapore hotels include the Pan Pacific Orchard and the Pan Pacific Singapore. The company has 20 properties in operation and under development in nine countries across the Pacific Rim. Locations include Vancouver and Whistler, both in Canada, Seattle; Perth, Australia; Suzhou, China; and Bangkok, Thailand.

American Campus Communities, Inc., has begun construction on a 325-unit faculty and staff housing project at Princeton University, its second development at the New Jersey school but the REIT’s first that’s not for students.

The Merwick-Stanworth project, located on two contiguous university-owned sites just north of the main campus along Route 206/Bayard Lane, will be built in phases with completion expected in three years. The first 127 units are slated for delivery by summer 2014 with the remaining 198 units to be ready between late 2015 and summer 2016. They will consist of one-, two- and three bedroom apartment and townhome units and are expected to receive LEED Silver certification.

The dollar amount of the development was not released by ACC or by Princeton University. ACC, an Austin, Texas, based REIT, will develop, own and manage the Merwick-Stanforth housing units through a 70-year ground lease. The deal is being done under ACC’s American Campus Equity (ACE) program, in which ACC serves as the college or university’s sole partner and doesn’t charge them fees up front. ACC gets financial returns through long-term cash flow and benefits of ownership. The REIT has used ACE on other developments including Portland State University, University of New Mexico, Arizona State University and Northern Arizona University, according to an ACC spokesperson. ACE was used on a student housing project at Drexel University, due to open this fall, she said.

“Many factors are taken into account when a university and ACC decide to do a tax-exempt structure or an ACE transaction,” the ACC spokesperson told Commercial Property Executive. “Lately, we’ve seen a pretty even split between the two models.”

While this is ACC’s first faculty and student housing project in the United States, it is the firm’s second development at Princeton University. The REIT is also building the Lakeside Graduate Student Housing project south of Faculty Road. Scheduled for completion in summer 2014, Lakeside replaces the Hibben and Magie apartments and will have capacity for 715 residents in 329 units.

Both developments are part of the University’s Housing Master Plan, which began in 2005 to upgrade campus housing facilities.

“We are honored to help deliver premier housing for Princeton faculty and staff,” Bill Bayless, American Campus CEO, said in a news release. “By providing an affordable housing option with updated amenities and located in a vibrant neighborhood convenient to campus, this community will be a wonderful place to live.”

As part of the municipality of Princeton’s 20 percent affordable housing requirement for new residential projects, apartments for low-and moderate-income families will be included in the Merwick-Stanworth buildings. Those units are available to the general public.

In recent months, ACC, the largest owner, manager and developer of student housing in the U.S., has also made news for purchasing a large portfolio. The REIT picked up a 19-property, 12,049-bed student housing portfolio for about $863 million from Kayne Anderson Advisors, L.P. affiliates. It comprises properties at 14 universities including Michigan State University, Louisiana State University, University of Kentucky, University of Southern California and Virginia Commonwealth University.