The Mayor of CRE: Twin Cities Industrial, Entitlements & Building Wealth | Duane Poppe, SIOR Recorded November 5, 2026 Host: Justin Smith, SIOR (Lee & Associates Irvine) Guest: Duane Poppe, SIOR, CCIM (Managing Principal, Lee & Associates Twin Cities; Mayor of Osseo, MN) [00:00] Justin Smith: Welcome back everybody to the Industrial Insights Podcast. I have Duane Poppe with me, who is the managing partner for Lee & Associates in our Twin Cities office. And you launched this office about 10 years ago, from what I'm aware. I've had the honor of working with a couple people on your team. And then you have a unique position being mayor of one of your local towns, which I'd love to hear more about. And the mayor minute. If I recall correctly, that was [00:27] Duane Poppe: Yeah. [00:27] Justin Smith: one of Duane's spotlights. I love That was a good one. Is [00:31] Duane Poppe: Yeah. [00:31] Justin Smith: it still going? Can you bring it back? Or this will [00:34] Duane Poppe: Yeah. [00:34] Justin Smith: be our mayor forty five minutes. [00:36] Duane Poppe: Yeah, Exactly. No appreciate the opportunity to be here. [00:41] Justin Smith: Yeah, thank you for doing that. And let's start with mayor but only 'cause it's election cycle. We just had all these everything across the country and now knowing that you're running for president is good to know that you have to relinquish your mayor position. So tell [00:56] Duane Poppe: no. [00:56] Justin Smith: us about It that's been a long journey I would imagine. [00:59] Duane Poppe: yes, it started number of years ago, actually seventeen years ago. was on the council for three years and then have been the mayor of the community for the last fourteen years. So it's been interesting journey of all the things that we've been able to accomplish within the city. you know, the biggest one is just increasing the tax base, you know, lowering the Property tax rate, you know, ten out of the last twelve years, you know, we've had a couple of increases there, but you know, just good fiscal responsibility and kind of minding what's going on and bringing development. Osseo is a very unique community. It's in the northwest part of the Twin Cities. we're actually one of the oldest communities in the area. last year we celebrated our sesquicentennial, so 150 years as a [01:52] Justin Smith: Okay. [01:52] Duane Poppe: community and all the major suburbs have grown up around us. So if you take Osseo itself, the city boundaries is only about one square mile. You know, a quarter of it is non-revenue producing with the churches, the schools, and the government buildings in there. So it's a very unique challenge to be able to run an entire city with police fire, you know, city staff, public works all within that one square mile without taxing us out of existence. Thank you. [02:21] Justin Smith: Yeah, and what's the population? [02:24] Duane Poppe: We're about twenty seven hundred. [02:26] Justin Smith: Okay. And how'd you get involved? You live [02:30] Duane Poppe: You [02:30] Justin Smith: there [02:30] Duane Poppe: know, I'm [02:30] Justin Smith: and you said, we gotta do better or it's na now [02:33] Duane Poppe: Yeah. [02:33] Justin Smith: is my time? [02:34] Duane Poppe: No, I mean a lot of that too is, you know, it's seeing where we were as a community back then, and Obviously part of our job is presenting in front of other city councils and seeing what's going on in other communities and just being able to take that knowledge and experience and you know at that point help the community and you know also protect the biggest asset at that time, you know, your home, and just make sure that things go in the right direction. And so I just instead of sit back and complain on Facebook all day, I decided to jump in and get involved. [03:07] Justin Smith: Yeah, I love it. My sister lives in McCall, Idaho. And so many of people in our community, they all have rotated through all the main aspects and roles that there are within the city to help run it because that's their community and it's not something you like outsource. It's your community, like you take care of it. Yeah. [03:27] Duane Poppe: Yeah. [03:29] Justin Smith: That's awesome. And so then you learn all sorts of new stuff I would imagine and then take all your real estate experience and you have that lens. that you can bring [03:37] Duane Poppe: Yeah. [03:37] Justin Smith: to the table and I'm sure you've that's helped your real estate experience too. [03:40] Duane Poppe: Yeah, I mean it was kind of twofold. One, I mean, it was kind of a graduate degree in how cities work and the processes and the hoops you need to get through to accomplish projects. And then that's allowed me then to go to other communities in the area, obviously having relationships with mayors and council members on other communities and almost going top down on projects, having conversations with mayors or council members, be like, Do you think this will have any support if we kinda do this kind of project within the community? and be able to have that feedback even before you kind of come bottom up through the city staff. Sometimes there's that disconnect between city staff and what the council will approve, and it can be either way. You know, where the staff thinks it's a good idea and council has no interest. So it's be able to, you know, shorten that time frame and, you know, not waste a bunch of money and time for clients. [04:35] Justin Smith: That's huge. Like, I'm sure with development is one thing. I know for us in Orange County it's an infill market, so a lot of it is like conditional use permits or anything that has to do with going through the city. And that's not even on my radar that there is the potential for [04:50] Duane Poppe: ha. [04:50] Justin Smith: disconnect between the front counter people and the council. And [04:55] Duane Poppe: Oh yeah. [04:55] Justin Smith: like you know they clearly like a work together and that things [04:58] Duane Poppe: Yeah. [04:59] Justin Smith: like a CUP will end up going to a meeting, so like a they must work together, but That's that's a good thing to know about and to like be able to like manage to the extent possible. [05:11] Duane Poppe: Yep. Yep. Just yeah, managing those expectations for clients and timing and it just there's so many different city hoops that, you know, sequential steps that you need to go through to get to the next level and you know, if you can set those expectations early enough and say, This is how long it's gonna be, is this still a viable opportunity to you know, just working through a deal here locally that we needed a text amendment change within a zoning code and then And then having conversation with the both ownership and tenant that those two steps, you know, and then having to apply for a CUP within that zoning code, those steps can't sequentially happen. they have to follow the process. The text amendment has to be changed, then this then the CUP application. So it's just a timing issue and setting those expectations. And then obviously it always gets to be a issue at the end of the year here with only one meeting typically in December, people coming. approve their budget and then you don't have so it's almost an extra month of you know just city process that you have to set that timing. [06:17] Justin Smith: Yeah. Does that give you different perspective when you think of like other government that you see, like whether it's like the state or the country or like that causes you to be like more tuned in? [06:28] Duane Poppe: Yeah, I mean, end of the day I've always felt that the further you get away from the people, the less change you can affect. And that was one [06:36] Justin Smith: Yeah. [06:36] Duane Poppe: of the big drivers being [06:38] Justin Smith: Yeah. [06:38] Duane Poppe: involved in local where you can make changes that will positively affect people and you're not You know, I've been asked you know, go to a state level and I know a bunch of people at the state level and I've some friends at the national level and it just it's just a different animal there. [06:55] Justin Smith: Yeah. [06:56] Duane Poppe: you know, and then especially on a state level, if whatever parties in control, if you're not in that, you can campaign and say you're gonna do all this, but you're just gonna sit there and spin your wheels. So and it and that would be frustrating. It's for me it was never it's never about politics. It was always about Let me just run this enterprise as efficiently as we can. And like you know, I told a lot of people at a city government, you know, it's partisan. You don't have to, you know, in our you know, most of the cities here, you don't have to get support from one party or the other. I've had a lot of conversations with you know council members to say, you know, it's pretty simple on the council. People want clean water to come to their house, they want dirty water to leave their house, they don't want their cars to fall apart. as they drive to and from their house and feel safe, police and fire. And that's about it. We [07:48] Justin Smith: boom. Yeah. [07:49] Duane Poppe: we you don't have to get political, you don't have to support this, you know, agenda or that agenda. It's run this enterprise as efficiently as we can. [08:00] Justin Smith: Yeah. I love it. That's awesome. Keeps it simple and it takes care of your surrounding area. [08:05] Duane Poppe: Yep. Yep. [08:07] Justin Smith: And so that's not enough, so we're managing the office too. [08:12] Duane Poppe: Exactly. So [08:13] Justin Smith: have you done that since day one? [08:15] Duane Poppe: Yeah, there was four of us that started the office and, you know, grew it here to you know, over the ten years and yeah, I was looking to add people and kinda tell the the Lee story and the value of entrepreneurship and the opportunity to have a seat at the table on the ownership level. [08:33] Justin Smith: Yeah. I get some president and managing partner love. Jack Cline I got to talk with [08:39] Duane Poppe: Yeah. [08:40] Justin Smith: probably ten days ago. He's awesome. It was so fun to spend time with him and then learn a little bit about how they look at their office, how they run it, how they recruit. And you're not you're gonna run for re election for managing partner then too, I would imagine. [08:55] Duane Poppe: yeah. didn't run for a re election for the mayor this year, but yeah, managing principal will we'll keep chugging along. I don't think anybody else wants the baton in our office. [09:06] Justin Smith: Yes. It's the crown is heavy. [09:09] Duane Poppe: Yes. [09:10] Justin Smith: did you manage before Lee? [09:13] Duane Poppe: no. I was just, you know, a broker for a long time. and we had the opportunity, you know, or brought in with the group that proposed to open the office there locally and, you know, just kinda joined on and kinda talked amongst ourselves and they were like, We all think you should do it So I said, All right [09:30] Justin Smith: Yeah. how'd you all come together? All from the same firm or how like it tell a little bit of the origin story? [09:37] Duane Poppe: Yeah, no, I mean just different firms. you know, we all came together and just knew each other from different shops and then kinda came together and kinda launched the office. [09:48] Justin Smith: And you got to go in front of all the presidents when it was time to like present your office? I remember being in some of those. [09:56] Duane Poppe: Yeah, I was actually not at that meeting, you know, at that point, still with another firm that you know, had some stuff going on, so allowed them to make the presentation and kinda keep my involvement a little quiet initially and until it was kind of approved and then we got the kind of got the office going and made the move. [10:17] Justin Smith: Yeah. I love that. I would imagine it's not high pressure but like being in front of a lot of your peers and trying to get into the inner circle. Like that's cause [10:28] Duane Poppe: Oh yeah. [10:28] Justin Smith: you to make sure you're polished and looking good and you know [10:31] Duane Poppe: Oh [10:31] Justin Smith: your [10:31] Duane Poppe: yeah. [10:31] Justin Smith: numbers and you [10:32] Duane Poppe: Yep. [10:32] Justin Smith: know your story. [10:34] Duane Poppe: Yep. And had to give a few updates to the presidents at meetings which is a little nerve wracking and they hammer you questions. But you know, it makes you know, there's some good ideas and helps, you know, just make things better and it kind of improve your processes locally. [10:49] Justin Smith: Oh yeah. I love everybody's doing the best they can and like there's always so willing to share. Like there's always plenty of great ideas for improvements. [10:56] Duane Poppe: Yeah. And I really think that's, you know, kind of the glue that, you know, makes Lee a little different because, you know, with all of us investing in each other's offices, everybody wants everybody to do well. [11:09] Justin Smith: Yeah. [11:09] Duane Poppe: And I mean that just helps everybody. So it's like, yeah, I mean I can't tell you the number of people, you know, around the country that have just been amazing with questions and obviously Rinkov has just been amazing. be able to get questions or you know, run situations by 'em. And everyone's just so willing to help and lend it. It's such an amazing family across the country. Even and it's unique to still have that as we continue to grow. Because [11:37] Justin Smith: Yeah. [11:37] Duane Poppe: we were the fifty-fifth office. So I mean it's been thirty offices since us and I feel like that culture and that camaraderie is still there. [11:47] Justin Smith: Yeah. That's an interesting perspective. Like having seen like a when you joined and what that was like as though perhaps when I started was fresh out of college, like I know what that's looked like here locally at our office and then to the extent like working with people nationally, but not like quarter by quarter with all of the presidents meetings and like a getting to see all of it evolve from the inside [12:11] Duane Poppe: Yeah. [12:11] Justin Smith: and from all like the managers and the leaders. [12:14] Duane Poppe: Yeah. it's been interesting. Like I said, Jeff's been doing a great job. [12:19] Justin Smith: Yeah. And we have a lot of fantastic stars that have joined or that are leading some of the new offices that have been real assets to the company [12:25] Duane Poppe: Yeah. [12:26] Justin Smith: and the group. [12:27] Duane Poppe: Yep. [12:28] Justin Smith: tell me about your book. Is your book of business primarily industrial? Do you have a good mix or like how would you describe it at present? [12:37] Duane Poppe: yeah, no, I mean minus it's been industrial kind of all my life. you know, so I've been was really heavy on the landlord side. Landlord rep before I came over here. And that was really kind of, you know, I made that decision when I came over that that's gotta be a little less because it's very time consuming. you know, and you're kind of beholden to, you know, that owner and between the reporting and the showings and you know availability to do other business as well. They're kind of like, well, you know, focus on our portfolio. So since then I've you know kind of had a little more balance. approach you know kind of the three-legged stool with some listing work and then sales and then tenant rep you know so and then obviously you know doing a little bit more tenant rep here last year or so you know so it's kind of trying to have a little bit each of those buckets [13:35] Justin Smith: Yeah, I love it. It's funny when you look back every year of what deals closed and where all the revenue came from and that a different leg of the stool might carry the year [13:44] Duane Poppe: Yeah. [13:44] Justin Smith: in any given year, even if you're trying just as hard and you're just as laser focused on whatever your primary [13:50] Duane Poppe: Yeah. [13:51] Justin Smith: is, like that's just the nature of the business. [13:54] Duane Poppe: Yeah, and I think you look at it, yeah, as you do your business planning, you're like, I've got all these opportunities and I'm gonna do this and you look back and you're like, Hardly any of those closed but yet all this other stuff was filled in. You know, I just you know, as we preach here I just think it's you know Money loves clarity and you know, as clear as you can be on your direction in your activities, I think that will generate other activities that you're not even thinking about. and I think where by being active and even if I was We were just talking about this the other day. It's like I feel even when you're cold calling and you feel like you're getting nowhere, you know, the universe rewards you for your hard work where you know another opportunity will just come out of thin air for you. So it's [14:43] Justin Smith: Yeah. [14:43] Duane Poppe: like just put your head down, continue to work, do what's right, you know, build relationships 'cause it just takes time. Yeah. [14:50] Justin Smith: You're like, how does that make sense? And you're like, trust me, with time you will recognize like that's [14:56] Duane Poppe: Yeah. [14:56] Justin Smith: how it plays out. And so you can [14:58] Duane Poppe: Yeah. [14:58] Justin Smith: accept it or you can fight it. [15:00] Duane Poppe: Yep. So yeah, just don't get discouraged and, you know, keep doing what's right every day. [15:06] Justin Smith: Yeah. On the tenant rep I found a article that said the mayor of CRE delivers. I love it, dude. That was [15:13] Duane Poppe: ha [15:15] Justin Smith: So good. I love like those ones cause rolls right off the tongue. And it was referencing a Niagara bottling deal that you worked on. [15:23] Duane Poppe: Yeah. [15:23] Justin Smith: And I was curious if that's a good one to explore a little bit of like what it was, how it went down, and a bit of that story. [15:31] Duane Poppe: Yeah, I mean obviously, you know, I was helping out a Lee client here locally. Mike Earnheart was running that account for a number of years. And that was a very unique situation. That started as a two state site selection because with their model, as their customer base grows, then they're able to they want to be within two hundred and fifty miles of major customers because transporting waters you know gets to be expensive. you know, so we started that and then kind of knowing kind of the requirement, what it takes, and starting not with the real estate, but for me I started on the side of what cities have excess capacity within their water system to be able to handle this requirement. So instead of running around looking at buildings, starting on the kind of wearing the government hat at that point, saying, okay, that those were the questions with the cities. Do you have excess capacity within your existing system because of the timing of the deal? We're not talking about future build-out or anything. We you know, within the next three to five years, can you handle this within your system? So there was a number of communities that got thrown out immediately, you know, that had viable buildings but didn't have the capacity. So then [16:48] Justin Smith: Interesting. [16:48] Duane Poppe: we did that and then it was a lot of driving through Wisconsin and then into Minnesota kind of up and down you know [16:56] Justin Smith: Cheese [16:56] Duane Poppe: based [16:56] Justin Smith: curds. [16:57] Duane Poppe: on their yeah so looking that you know having city meetings and ended up you know had one site under contract and again this is you know as we mentioned earlier City staff were all for it, gets the council and they're like, No. So not interested. So then we had to fire things back up and then ended up finding another community that had excess capacity within their system, be able to find some land, do a build-to-suit there and again, you know, there's community uproar about the use there and then but having relationships with their city manager and the mayor I was able to kinda kinda answer their questions and give them information to help them look better in the public, you know, during the meetings and things. So there's a little bit of background information that behind the scenes work to help that [17:54] Justin Smith: Yeah. [17:54] Duane Poppe: project be successful. [17:56] Justin Smith: It takes a lot of educating all the way around and from everyone's perspective so that they can understand 'cause not everyone's a real estate guy or a water guy or there's so many people that are all focused on their one slice of what they know best. [18:09] Duane Poppe: Yeah. [18:11] Justin Smith: It's gotta be a fun project when you just think of like sometimes when you hear the word site selection, you know it's gonna be broad and like there's a lot of work that goes into [18:19] Duane Poppe: Yeah. [18:19] Justin Smith: that that's different than just like the regular go out and lease a building type of process. [18:24] Duane Poppe: Yeah. Yeah. [18:26] Justin Smith: How long would you say that went start to finish? [18:29] Duane Poppe: Oh. That was Over two years probably. [18:34] Justin Smith: Okay. [18:35] Duane Poppe: From the initial call to some preliminary, you know, buildings and then they're like, Okay. Then they came back and then it was Yep, we're gonna do a deal, we gotta find something and then that's when we're like, Okay, if this is for real that we gotta look at the capacity side of things before we even worry about the real estate. So [18:57] Justin Smith: Yeah. [18:57] Duane Poppe: and then that And then it took us a while to get through the one community and then all of that stages and then to get shot down and then to fire it all back up. So it was a fun. long took more took quite a few twists along the way, but we got it done. [19:14] Justin Smith: That's how it is. Yeah, it's funny thinking through like some people start will need to start with labor or like power availability, water is a huge one. And yeah, now with like moratoriums on new development for certain cities, like there certainly is plenty of like filters you gotta go through with site selection type of assignments. [19:37] Duane Poppe: Yeah. [19:38] Justin Smith: you must get some inbound business. [19:41] Duane Poppe: Yeah. [19:42] Justin Smith: and [19:43] Duane Poppe: Yeah, 'cause [19:43] Justin Smith: what [19:43] Duane Poppe: I Yeah, I mean that goes just back to relationships, you know, and you know, understanding what the market and be able to provide value not only for the client but you know, the other broker that's referring those opportunities. [19:59] Justin Smith: Yeah. What are some things people coming from California or out of state learn when they're like, Oh, that's how you guys do it over there? 'Cause inevitably like all places have their own local rules, way they quote things or like [20:15] Duane Poppe: Yeah, [20:15] Justin Smith: sometimes [20:16] Duane Poppe: we're I know per square foot per year, you know, unlike you [20:19] Justin Smith: Okay. [20:20] Duane Poppe: guys with your [20:20] Justin Smith: Just holding [20:21] Duane Poppe: per [20:21] Justin Smith: out [20:21] Duane Poppe: month. [20:21] Justin Smith: or we're holding out or [20:22] Duane Poppe: Yeah. [20:23] Justin Smith: someone's doing it. [20:25] Duane Poppe: Yeah, and [20:26] Justin Smith: Yeah. [20:26] Duane Poppe: then what was unique and that's been changing a little bit here in our market, we always used to have two rates, you had an office and a warehouse rate. [20:34] Justin Smith: Yes. [20:34] Duane Poppe: You know, so but now I mean obviously people are more moving towards that blended rate, you know, so [20:41] Justin Smith: Okay. [20:42] Duane Poppe: and I mean rates of You know, you joke in our market for a long time. I mean, you can look at old brochures from the seventies, eighties into you know, early two thousands and we always joke we're kinda eight and four market. We're eight seventy five, four seventy five, three seventy five, I mean we just bounced. And then you really and you know we didn't most of the owners were [21:10] Justin Smith: You mean [21:10] Duane Poppe: local. [21:10] Justin Smith: like peak to trough or like between A and okay, yeah. [21:13] Duane Poppe: Yeah, they would just float within that range for years and then we'd develop and then the rates would come down and then it would take a while to fill back up and then you've just seen, you know, really over I would say the last I'd say fifteen years it's really become the market's been become a lot more institutionalized. like I said, it was a lot of local owners where then I remember when AMB, before they became Prologis, it was one of the big owners and the I remember the big shock wave, it was when they did vacancy prep when they would clean it and, you know, white box it and you know dress it up for a show and people are like, What? You know, so then everyone kinda followed suit. And [21:59] Justin Smith: What [21:59] Duane Poppe: then, [21:59] Justin Smith: are they [21:59] Duane Poppe: you [21:59] Justin Smith: doing [22:00] Duane Poppe: know, [22:00] Justin Smith: over there? [22:01] Duane Poppe: yeah, [22:01] Justin Smith: Yeah. [22:01] Duane Poppe: they're like they're spending all that money or building spec office. They're like, what? You know, it you was just kind of broom clean and here you go and we'll figure it out. you know and then as the institutions really came in, you know, the Links and other ones have really driven up rental rates within our market. You look at some of the stats over the last three years we've had almost 14% rental increases just because we're so far behind you know the rest of the country as you look everyone else. it was you know pound these rates and just you know, I mean over the over that kind of fifteen year time frame you used to do kind of a blended deal you'd be at five and a quarter and now it's nine and a quarter, you know, to ten bucks, you know, per square foot. So I mean it's really exponentially grew over that time and it's really been I'd say the last seven, eight years, you know, you had you like as I mentioned Link before, they were non existent in our market and literally bought a every owner out here locally and then they became the largest and then a local group here were second and then they've kind of gobbled up and now they've leaped over Link to be the largest in the market. [23:20] Justin Smith: Okay. That's wild to see it institutionalized like that. And [23:24] Duane Poppe: Yeah. [23:24] Justin Smith: it's true, that's just how it is. And there are expensive assets to maintain, boxes have gotten bigger, more capital is needed, and now everyone can buy REITs as part of their retirement portfolio [23:37] Duane Poppe: Yeah, [23:37] Justin Smith: if they want [23:37] Duane Poppe: exactly. [23:37] Justin Smith: to. [23:38] Duane Poppe: Yeah, and then typically a building in our market, our total market's about three hundred million feet. Yeah, you get about half of it's you know, single tenant, owner, user, half of it is multi tenant, roughly, you know. and You know, our typical size in our market is usually, you know, historically was kind of that two to two fifty. You know, then some people are doing three hundreds. And you know, we only have, you know, one, you know, CRG came and built a million square footer or their you know, [24:10] Justin Smith: Cubes. [24:10] Duane Poppe: their about The Cubes, [24:12] Justin Smith: Yep. [24:12] Duane Poppe: and that still ended up two tenants. I remember back in the day with the national developer came in, it was a hundred 180,000 square foot building. They came with a plan and they're like, here it is. And we're like, you only have one entrance. They're like, well, it's just a little one. It's only 180. And we're like, it's gonna be more than [24:32] Justin Smith: Welcome [24:32] Duane Poppe: one tenant. [24:33] Justin Smith: to the Twin Cities. Yeah. [24:34] Duane Poppe: Yeah, exactly. So we had to do entrances on both ends and then, you know, a glass pack in the middle that could so you could have up to four tenants. And sure enough, that's how it leased was four tenants. So [24:47] Justin Smith: Yeah. [24:47] Duane Poppe: I mean there's some unique challenges, so [24:49] Justin Smith: What's a glass pack? [24:51] Duane Poppe: just with the doors and windows kinda in the side of the panels so you can put those in there so you can have separate entrances along the front face of it. [25:02] Justin Smith: To go from two to four? [25:04] Duane Poppe: Yeah. [25:04] Justin Smith: yeah. Okay. [25:05] Duane Poppe: Yeah. [25:05] Justin Smith: and that's how it went. [25:07] Duane Poppe: Yeah, ended up four tenants. [25:10] Justin Smith: Yeah. [25:10] Duane Poppe: You know, I a you know it you know, and they had to tweak their pro forma a little bit just 'cause obviously you're separating power and adding demising walls and, you know, separate restrooms throughout. So I mean it changes a little bit from a development perspective, but you know, most developers are, you know, accustomed to that here within our market. [25:30] Justin Smith: Yeah. It's I love knowing the local nuance and when I think of we talked earlier about Salt Lake City being a place where we could expand someday, with our company. a lot of projects that I had mentioned to you look at like Southern California versus Phoenix or versus Vegas and sometimes versus Salt Lake City. You must get conversations like that. Clearly Wisconsin is one of the alternative markets that people look at when they're doing their site selection. and you probably have people if you're gonna go bigger, you go to Chicago, or what is the general like order of operations when people are figuring [26:09] Duane Poppe: Yeah. [26:09] Justin Smith: out like should we be in the Twin Cities or should we be somewhere else based on labor or based on bigger boxes or based on like a saving money? [26:19] Duane Poppe: Yeah, I know, I mean if you look at people in this area, it's usually Chicago and then you make the leap to the Twin Cities. and that's where you see a lot of you know, back in the day you didn't see a lot of bigger deals in our market, but now as people's and then we're getting deliveries out of Chicago here and that was it where now customer base has grown enough where and nobody likes to wait more than a couple hours for a package. So now [26:52] Justin Smith: No. [26:52] Duane Poppe: then [26:53] Justin Smith: Never. Yeah, that'd [26:54] Duane Poppe: yeah. [26:54] Justin Smith: be terrible. [26:56] Duane Poppe: And then now so you build, you know, so a lot of those have now locations here. where you just see new companies coming into the market that have never been here just because they used to be out of Chicago and now they're here. And we're kinda you know, our market is really kinda the end of the supply chain. You know, like I said it comes out of Chicago or Kansas City up here and then from here we're kind of the hub and spoke and then we go throughout Minnesota and even, you know, to the Dakotas. You know, but then that's the next leap is North and South Dakota, either Sioux Falls or Fargo, now you're starting to see kind of that expansion that we saw a long time ago. Now people are making that leap. You know, just going a little further west 'cause you get then beyond that through the Dakotas, you know, into Montana and there's just not the volume of people. [27:53] Justin Smith: Yeah. Totally. And when you think of the new class A, where it's being built in the Greater Twin Cities area, what are the main pockets? [28:03] Duane Poppe: you know, obviously everybody's looking for you know, Twin Cities you have kind of the loop. You have I-94 that comes that's the east west road. Comes in splits, you have I-694, I-494, comes back together and continues I-94 out to Fargo. Then you have I-35, which you know, starts up in Duluth and ends down in Dallas. You so that's the main and then that splits the I-35E and I-35W. [28:29] Justin Smith: We're gonna have to go north, south, east and west, Duane, or [28:32] Duane Poppe: Yeah. [28:32] Justin Smith: I'm gonna my brain's gonna explode. Yeah. [28:34] Duane Poppe: Yeah, so that kinda creates the loop and then obviously everybody wants to be as close to the loop. So you see some development that are just outside of that. But really has been unique. There's a been a number of developers here local recently where they've bought older non you know some of these single level office buildings that have a major sea of parking and they've actually demoed those and put industrial buildings on them just because of the locations as kind of inside the loops you're seeing a number of those getting done now rather than kinda and there's still some that are taking the next ring out to be able to find know, greenfield sites, you know, so I mean you get a little out of town and there's still acreage available, but then again it's access to labor, power, you know, all the usual requirements that you see. [29:30] Justin Smith: Yeah, the land of ten thousand lakes, I would think there'd be plenty of water. [29:34] Duane Poppe: Yes, there is. [29:36] Justin Smith: Yeah. I love it. I had gone there to visit a client last September that you've helped me do some like broker opinions of value for that in is in the Roseville market or sub market. [29:47] Duane Poppe: Yeah. [29:48] Justin Smith: So it's interesting to be up there and then just see like the lay of the land, what's out there, how green it was. I clearly was [29:55] Duane Poppe: Yeah. [29:55] Justin Smith: there like a fall time and it's so much fun just to compare 'cause it's such a different environment than what we're used to. [30:03] Duane Poppe: She just come in the winter when it's twenty five below. [30:05] Justin Smith: Yeah. The plane wouldn't take me there, it just stopped. yeah, the door wouldn't open. funny. And then shallow bay, small bay, that's a thing. Do you guys have a lot of product there? Is that anything that's we still build more of, or is it like hard [30:20] Duane Poppe: no, [30:20] Justin Smith: to get [30:20] Duane Poppe: I mean [30:20] Justin Smith: your [30:20] Duane Poppe: that's [30:20] Justin Smith: hands on? A lot of people it's exciting, it's like the new multifamily with a lot [30:25] Duane Poppe: Yeah. [30:25] Justin Smith: of operators trying to buy it. [30:27] Duane Poppe: Yep, I mean you're starting to see a few of those come in, but again I think it's cost of construction, you know, with all the demising walls and separate you know, with the separate meters and you know, for all the utilities. you know, you're starting to see a few of 'em that have come up and we've had a got one client that's looking at doing a you know, doing about a eleven thousand square foot building so that you don't have to do sprinklers in it, but you know, drive ins, you know, for those small contractors and things. So you're starting to see a few of those pop up. But you know, our market was, you know, back in the day was all fourteen to eighteen clear. And then twenty four clear was the next step and people thought, [31:06] Justin Smith: Class [31:06] Duane Poppe: Oh boy, [31:06] Justin Smith: A, [31:06] Duane Poppe: that's [31:07] Justin Smith: twenty four [31:07] Duane Poppe: and [31:07] Justin Smith: foot. [31:07] Duane Poppe: yeah, and then you know 32 is still kind of the max in our market obviously there's a couple of outliers that you know go a little bit taller but you know the buildings that most people build are kind of that 32 and then now that if it if 32 doesn't work you'll see 28 that gives you the flexibility to go a little higher but if you don't have the truck court the trailer parking going all the way to 32 with your you know column spacing it you know it just makes it a little challenging where at a 28 you can still have smaller tenants and you know have a little bit more office finish [31:48] Justin Smith: Yeah. Yeah. It's yeah, now having class A and how much it gets built and who ends up taking it and when is it [31:56] Duane Poppe: Yeah. [31:56] Justin Smith: on sale? And like I love when it's on sale and then you'll have people move up, like the proverbial flight to quality and [32:03] Duane Poppe: Yeah. [32:03] Justin Smith: that be like a thing. Would you say in the cycle you guys I have noticed here like we peaked pretty hard during COVID. Now we're down in the trough. And like a rates have gone down forty percent. And [32:17] Duane Poppe: Wow. [32:17] Justin Smith: then if you think of like next to us in Phoenix as an example, rates were strong. they never peaked too hard, they didn't have a trough, and now they're up thirty percent from what they were like a pandemic time frame. So how did you guys experience it? are you in a trough? Did you not really like have Too big of like this eight the eight to four that turned into the nine to five or the ten to six, the new [32:46] Duane Poppe: Yeah, [32:46] Justin Smith: band? Did we [32:47] Duane Poppe: no. [32:47] Justin Smith: not [32:48] Duane Poppe: I [32:48] Justin Smith: hit [32:48] Duane Poppe: mean I would say, you know, we the increases aren't as much. they're more stabilized now. you know, spec has slowed a little bit just because of rates having caught up to the cost of new construction, you know, your financing and your exit cap rates, all of those make it a little more challenging. So I mean we probably have about seven million square feet of new stuff coming up and I mean it's probably five hundred or five million of that is is build-to-suits. So I mean there's not a whole lot of spec going up right now. You know, so there's that's and that, you know, going back to another old AMB story, that was back in oh eight or so when we had the you know, original meltdown. And kind of right during that they sold their entire portfolio in the Twin Cities and talking to them, you're like, Who what are you guys doing? Selling in, you know, the down market. And they just said, you know, the Twin Cities, you guys are kinda like a bond market. You don't really go up, you don't really go down. We're still up in this market and we can deploy these this money on the coast and we can make way more money riding the next cycle up than we could holding these assets here. So I mean that's I mean we've got a you know very diverse base of Fortune 500 companies here and you know good education, good workforce. you know, so it's a pretty stable market, so we don't see these major swings that you see in other markets. [34:30] Justin Smith: Yeah, I love that. That's consistency and predictability. [34:35] Duane Poppe: Yeah. [34:35] Justin Smith: Gosh, you don't value 'em until you've experienced the other side. And then you're like, [34:39] Duane Poppe: yeah, [34:39] Justin Smith: okay, [34:39] Duane Poppe: exactly. [34:39] Justin Smith: I would prefer to just kinda know what I'm gonna be getting and [34:43] Duane Poppe: Yeah. [34:43] Justin Smith: like plan accordingly rather than have like [34:45] Duane Poppe: Yeah. [34:46] Justin Smith: a chaotic experience. [34:49] Duane Poppe: Yeah. [34:50] Justin Smith: I did some work for DiaSorin for a long time. We did a big deal down here and there up in your area as well. It's DiaSorin Molecular, and then they were making a lot of the machines that would process COVID tests and they would make 'em for hospitals. And that was when I first learned that like there is a life science industry up there and like it is pretty well [35:09] Duane Poppe: Mm-hmm. [35:09] Justin Smith: diversified. So it was cool to work with them on it. And though we have not done a Minnesota deal with them yet, maybe [35:15] Duane Poppe: Yeah. [35:16] Justin Smith: always keep [35:17] Duane Poppe: Maybe [35:17] Justin Smith: that on [35:17] Duane Poppe: soon. [35:17] Justin Smith: the radar. [35:18] Duane Poppe: Yeah, and that's you know, like Boston Scientific is here and I think Boston Scientific has more people in Minnesota than they do out east. They've [35:30] Justin Smith: Okay. Yeah. [35:31] Duane Poppe: got a you know, and then obviously Medtronic is here. Yeah, and that's what you see on the whole medical devices, these companies, a lot of people spin out of 'em, create startups, grow 'em to the point. Because if you look at medical device and all that, it's they get to a certain level and then they just disappear because one of the biggest just gobble 'em up and then spin these guys back out and create a new company and they just you have kind of these perpetual entrepreneurial kind of people that have kind of come out of that world where they've developed develop product, get bought out, start a new product, get bought out, and they just you know they pop up, same people, different name and another location. [36:14] Justin Smith: Yeah, serial entrepreneurs. We need those guys. [36:18] Duane Poppe: Yes. [36:19] Justin Smith: I got last topic for you, Duane, is buying buildings, investing. Would you some people stay out of it and then just go regular stock market. some people are like trying to buy and do buy buildings with clients, or invest in other developer and investors' deals or they buy Prologis stock. What's your version? What do you like to do? When it comes to like investing? [36:41] Duane Poppe: All the above. you know, I kind of I've always thought just kind of scatter a little bit everywhere, you know, and you know, it'll all come up. But no, I think just for us within the business, the ownership of real estate, obviously you always think you don't have enough money to do it when you're younger, but then you always as you get older you think, God, I wish I would have invested more into real estate. And you [37:05] Justin Smith: Yes. [37:05] Duane Poppe: know, just with the depreciation with the appreciation of the asset and the benefits we have as being in the business per the tax [37:15] Justin Smith: Yep. [37:15] Duane Poppe: code. [37:16] Justin Smith: Yep. [37:16] Duane Poppe: it just i that's really the place for us and as we talk here there's really a difference between making good money and building wealth. [37:28] Justin Smith: Yes. [37:28] Duane Poppe: And those are two different things. And it's [37:31] Justin Smith: Don't [37:31] Duane Poppe: having [37:31] Justin Smith: get 'em [37:32] Duane Poppe: the [37:32] Justin Smith: twisted. [37:32] Duane Poppe: Yeah. [37:33] Justin Smith: Yeah. [37:34] Duane Poppe: And I think, you know, that's another unique thing about Lee that really allows people to help build wealth, you know, through the entrepreneurial nature, your ability to do deals, your ability to invest into deals, invest into other offices, you know, the AEF [37:49] Justin Smith: Yeah. [37:50] Duane Poppe: funds, all [37:51] Justin Smith: Yeah. [37:51] Duane Poppe: the people that syndicate deals, and you just throw money all around and then have all of it just working together and taking advantage of, you know, as I said, us being in the business. [38:03] Justin Smith: Yeah. It's wild how many people syndicate deals in your marketplace. Once you open your eyes to it and you know who all the main players are, and then it's pretty cool there's quite a bit of opportunity. [38:16] Duane Poppe: Yeah. [38:17] Justin Smith: Nice. I've taken a Duane approach to myself. It's every year is a little bit I'm a new person, I have a different amount available, I may have another [38:26] Duane Poppe: Yeah. [38:26] Justin Smith: amount that came out of a prior deal, and then to try and like rebalance and figure out like, okay, in today's environment what should we be doing? So it is fun to have all of those available to you and then figure out which [38:39] Duane Poppe: Yeah. [38:39] Justin Smith: one makes sense for this pile at this point in time. [38:42] Duane Poppe: Yeah. Yep. [38:45] Justin Smith: Cool. Well let's get out there and make it happen, Duane. Yeah, [38:48] Duane Poppe: Yeah. [38:48] Justin Smith: I appreciate you spending time. It's fun to get [38:50] Duane Poppe: Yeah. [38:50] Justin Smith: to know you better and learn about the market and the office and part of your journey. [38:55] Duane Poppe: Yeah, no, I appreciate. Thank you for having me on. [38:58] Justin Smith: Yeah, super. Okay, well I'll catch you later. [39:01] Duane Poppe: Sounds good. Thanks. [39:02] Justin Smith: Okay, see Duane. [39:03] Duane Poppe: Bye. [39:03] Justin Smith: Yep, bye.