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Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 8:10 am
by QuietBlue
trkaiser wrote:
March 23rd, 2018, 7:45 am
What do you all think about the reports that Target and Kroger might merge? While that brand doesn't have a big presence in our area, it's the second-largest retailer (behind Walmart) and 18th largest company in the U.S. according to Wiki... this could be good for downtown.
I think it's very unlikely, and even if they did, there's no guarantee they'd stay here or expand significantly (for one thing, Kroger benefits tremendously from being in the same downtown as P&G).

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 8:38 am
by SurlyLHT
Target, appears to be a stronger company than Kroger. Although they have fewer stores and less revenue they have a larger Net Income and are more up with the times. (Kroger $1.9 billion vs Target $2.7 billion) Minneapolis might not come out bad with a merger. However, this is just all rumors with conflicting reports from CNBC and Fast Company.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 8:44 am
by kirby96
Admittedly know nothing about this except for the article I just read after seeing the post, but doesn't it seem more likely that if they were to merge that it would be more like Target 'acquiring' Kroger in the mechanics of how it actually went down?

Target has faced challenges, but seems to have righted the ship somewhat lately, but they've had a fairly crappy experience with groceries. Meanwhile, the grocery market is in really tough shape.

In other words, if they were to merge doesn't it seem more likely that the end product would look much more like 'Target with real groceries' than it would look like 'Kroger with a general merchandise' (or some bastardization of the two)?

And if so, seems like Target management (and HQ) would be less likely to give way than would Kroger's. Seems far riskier for a grocery company to integrate all of what Target does (design, supply chain, on-line) than it does for Target to simply enhance groceries. Packing all that up and moving it would be a big deal, and they'd lose lots of folks in the process. Not too mention that Target is simply bigger (edit: from a market capitalization standpoint), and I gotta think their brand is much stronger...

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 8:51 am
by SurlyLHT
kirby96 wrote:
March 23rd, 2018, 8:44 am
Admittedly know nothing about this except for the article I just read after seeing the post, but doesn't it seem more likely that if they were to merge that it would be more like Target 'acquiring' Kroger in the mechanics of how it actually went down?

Target has faced challenges, but seems to have righted the ship somewhat lately, but they've had a fairly crappy experience with groceries. Meanwhile, the grocery market is in really tough shape.

In other words, if they were to merge doesn't it seem more likely that the end product would look much more like 'Target with real groceries' than it would look like 'Kroger with a general merchandise' (or some bastardization of the two)?

And if so, seems like Target management (and HQ) would be less likely to give way than would Kroger's. Seems far riskier for a grocery company to integrate all of what Target does (design, supply chain, on-line) than it does for Target to simply enhance groceries. Packing all that up and moving it would be a big deal, and they'd lose lots of folks in the process. Not too mention that Target is simply bigger (edit: from a market capitalization standpoint), and I gotta think their brand is much stronger...
I agree. I also think the Twin Cities tops Cincinnati for retailing and the food industry. There is a lot of talent and infrastructure here. Post buying Mom Brands and then moving their cereal HQ here shows that.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 9:05 am
by Silophant
Right. Kroger benefits from being by P&G, no doubt, but would Targer (Kroget?) benefit more by being by General Mills and Land O Lakes and Cargill? Seems reasonable.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 9:09 am
by thom
SurlyLHT wrote:
March 23rd, 2018, 8:38 am
Target, appears to be a stronger company than Kroger. Although they have fewer stores and less revenue they have a larger Net Income and are more up with the times. (Kroger $1.9 billion vs Target $2.7 billion) Minneapolis might not come out bad with a merger. However, this is just all rumors with conflicting reports from CNBC and Fast Company.
Kroger is a significantly larger company, but they're both large companies. You'd have to imagine any potential merger would be a 'true merger' with executives coming in from both companies, and regardless of which city became the official HQ, the headquarters consolidation would probably take years.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 9:14 am
by nstudenski
Kroger was interested in an acquisition of Shipt before Target bought it, and these discussions are rumored to be related to an ecommerce-related strategic partnership, rather than a merger. An acquisition is even less likely - the two companies have strong brands, but they don't overlap. Kroger is known for high-quality fresh grocery (Target not so much), the opposite is true for home/apparel. Even if a merger was on the table, I don't see any reason for a HQ consolidation in either direction. The recent trend is toward headquarter deconsolidation.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 9:31 am
by xandrex
Yeah, I think any merger/acquisition would be a model where they'd end up with a two-headquarters strategy, at least for the short and medium term.

I think if something comes to fruition, the most likely model is just some partnership that integrates Kroger into Shipt. Otherwise, probably something similar to Target's CVS strategy - essentially sell its grocery business to Kroger and have them use their food expertise to figure out why Target struggles there so much.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 9:40 am
by min-chi-cbus
nstudenski wrote:
March 23rd, 2018, 9:14 am
Kroger was interested in an acquisition of Shipt before Target bought it, and these discussions are rumored to be related to an ecommerce-related strategic partnership, rather than a merger. An acquisition is even less likely - the two companies have strong brands, but they don't overlap. Kroger is known for high-quality fresh grocery (Target not so much), the opposite is true for home/apparel. Even if a merger was on the table, I don't see any reason for a HQ consolidation in either direction. The recent trend is toward headquarter deconsolidation.
The Kroger’s I’ve been to we’re mostly garbage, like a Rainbow Foods here. The one near us at the OSU campus was called “Kroghetto”. It really sucked, but that’s not to say all Kroger’s suck, but they certainly aren’t renown for high-quality products either (unless that’s a fairly recent change).

Net income doesn’t really have a strong bearing in the health factor between the two companies because they’re in different industries. The most important statements would be Cash Flows and the Balance Sheet, which would depict overall financial health relative to liabilities and financing activities, for ex.

Another factor: distribution. In the world of online shopping, it’s going through become more and more about competing with Amazon on cheap, effective distribution. My GUESS is that Kroger would excel in this area, considering how great grocers have to be as distributors to maintain positive margins, as well as Kroger’s ideal prominence in the lower Midwest, which is very central to a very high proportion of the US pop.

Re: Downtown Minneapolis Office Market

Posted: March 23rd, 2018, 8:14 pm
by Tyler
Target has almost twice the market capitalization as Kroger. In a merger they would be the dominating entity.

Re: Downtown Minneapolis Office Market

Posted: March 28th, 2018, 1:22 pm
by MNdible
Metro office vacancies update.

Mostly what we already knew. Downtown Class A office space is still doing pretty well, especially in the best buildings. Class B vacancies are through the roof.

And the West End submarket is still red hot.

Re: Downtown Minneapolis Office Market

Posted: March 28th, 2018, 3:09 pm
by LakeCharles
MNdible wrote:
March 28th, 2018, 1:22 pm
Metro office vacancies update.

Mostly what we already knew. Downtown Class A office space is still doing pretty well, especially in the best buildings. Class B vacancies are through the roof.

And the West End submarket is still red hot.
That link is broken, fyi.

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 12:41 pm
by BoredAgain
MNdible wrote:
March 28th, 2018, 1:22 pm
Metro office vacancies update.

Mostly what we already knew. Downtown Class A office space is still doing pretty well, especially in the best buildings. Class B vacancies are through the roof.

And the West End submarket is still red hot.
So, considering a ~20% vacancy rate in class B space and a ~2% vacancy rate in residential apartments, which under-utilized office buildings are ripe for conversion? Any speculation? Or do we have a major mismatch in desired residential locations and available office buildings?

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 12:55 pm
by VacantLuxuries
A quick look at the available spaces on LoopNet shows there's a number of really attractive buildings that are Class B. Particularly 825-831 Nicollet Mall and 500-520 Nicollet Mall. They'd make for great conversions if the owners wanted to go that direction.

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 1:08 pm
by MNdible
Ren Square isn't a very good shape floorplate for a residential conversion -- you'd probably have to blow open the atrium in order to get access to light into that deep floor plate.

Medical Arts is probably a better bet, although there are a lot of long term tenants there that wouldn't be happy. Possibly just the taller portion of the building could be converted?

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 1:11 pm
by alexschief
VacantLuxuries wrote:
March 29th, 2018, 12:55 pm
A quick look at the available spaces on LoopNet shows there's a number of really attractive buildings that are Class B. Particularly 825-831 Nicollet Mall and 500-520 Nicollet Mall. They'd make for great conversions if the owners wanted to go that direction.
The Medical Arts Building (825-831) would be especially nice because it would punch a nice hole in the downtown Minneapolis "no home zone." It's also not a deep, square building (looks about 70' wide), and so could be more easily converted.

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 1:37 pm
by nordeast homer
There's an eye clinic on the top of Medical Arts that has a really cool space. The main doc there has a fireplace in his office/exam room.

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 3:04 pm
by seanrichardryan
Something about getting medical services in a building built for and named 'The Medical Arts Building' just thrills me. LEAVE IT ALONE

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 3:22 pm
by Silophant
Note that the there's an apartment building literally adjacent to the Medical Arts building on 9th, so No Home Zone isn't quite accurate. (I'm picky because I lived in it up until December.)

As far as office conversions go, the Rand Tower is apparently getting converted to a hotel, so that'll take some Class B office off the market.

Re: Downtown Minneapolis Office Market

Posted: March 29th, 2018, 3:56 pm
by VacantLuxuries
And the vacancy rate would probably drop considerably if the (eventual? haven't kept up on their financial woes) new owners of the Northstar Center convert it to something else since they're 69% vacant right now.

Though the non-hotel portions of the building would be difficult to turn into housing.