Developers such as Marfield Belgarde and Yaffe Cos.,Moen Leuer and Wispark have bought large tracts insuch remote suburbs as Rogers and Lino Lakes for theirbuilt-to-suit and speculation projects, says JonathanYanta, vice president of industrial brokerage atUnited Properties in Bloomington, MN. In Rogers, forinstance, Marfield Belgarde and Yaffe is building a242,000-sf speculative building. "This move seemed unthinkable just a few years ago,"Yanta notes.Over the past five years, land prices have doubled inmany cases, from $1.75 per sf on average to $3.50 per sf andconstruction costs have gone up from 35% to 50%, he says. But rents, meanwhile, have gone upjust 20% to 30% over that same period,which means lower yields for owners and developers.

Yet another factor that has forced developers fartheraway from the core of the cities is a trend amongcloser-in suburbs to revise zoning regulations tofavor high-tech campuses over large distributioncenters. As a result, developers are taking theirprojects to the outer ring suburbs such as Shakopee,Mahtomedi and Farmington, in addition to Lino Lakesand Rogers.The land crunch has also spurred the reuse of a siteor building to accommodate a better use with higherrents, Yanta says.

For instance, United Propertiesrecently moved Seagate Technologies from fivelocations into one new 340,000-sf location inShakopee.One of the buildings, a 120,000-sf structure at8001 E. Bloomington Freeway, was essentially obsoletein that it had inadequate parking, low ceilings, frontentry at the rear and a configuration thatmade it hard to divide, Yanta says. But the buildinghad a good location, a solid infrastructure and goodpower and fiber connections, as was repositioned in anestimated $4.8-million renovation into a building that now houses G.N. Resound, a major hearing aidemanufacturer