The downtown office leasing market may be in the pits, but developers say "town offices" are thriving in many suburban areas, thanks to plenty of small businesses that find the residential-style spaces to their liking.

The long row of one-story Structures along Fernbrook Avenue in Plymouth could easily be mistaken for a residential development. Take a closer look, and you'll find more bankers and investment advisers than swing sets and barbecue grills.

The 18-unit office development, located near Highway 55 and Interstate 494, is known as Fernbrook Town Office Business Park. It's one of a growing number of "town office" developments in the Twin Cities.

The concept - making office buildings look like homes - is becoming increasingly popular in metro area suburbs, where it's blurring the lines between residential and commercial construction.

Todd Mohagen, principal with Mohagen/Hansen Architectural Group, said his company has designed more than 100 town office units in about eight developments throughout the Twin Cities in the past 1 1/2 years.

Most recently, Mohagen/ Hansen announced the opening of the Minnesota Valley Town Offices in Burnsville. The building - with its brick facade and pitched roof - has a strong residential flavor even as it provides office space ranging from 2,600 to 5,600 square feet.

"It's a relatively new concept," said Mohagen, whose firm designed units in both the Minnesota Valley and the Fernbrook developments. " And most of them are coming on line now."

Mohagen said the town office is a good fit for the smaller service companies that are driving the current economy. "I think that's why the trend is continuing," he said.

" And instead of paying a lease, for essentially the same amount they can get into this and have a piece of property to use either as estate planning or as an asset of the company."

Dave Ficek, a Roseville-based developer and builder, said he has built more than 160 town office units in cities such as Burnsville, Inver Grove Heights, Little Canada, Roseville, Maple Grove, Plymouth and Eden Prairie.

Ficek said the offices - which usually sell for $250,000 to $500,000 - appeal to small businesses be- cause they're an affordable alternative to leasing.
Cities like them, he said, because they provide a good buffer betWeen residential and commercial areas.

"The little guy -this is his chance to own a piece of property," Ficek said." And by doing them as town of- fices in multiple units, it just makes them that much more affordable rather than building an individual building."

A typical town office development has 10 to 50 units, with office spaces ranging from 1,200 to 6,000 square feet. Businesses have the option of leasing or buying the space, which usually includes kitchen appliances and other home-like amenities.

Scott Robertson said he moved the corporate offices of his company, Select Food Products, to the Fernbrook business park 1 1/2 years ago. He's also investing in other town office properties in the metro area.

Robertson, whose previously leased office space in a corporate tower, said his biggest reason for moving was financial. "We were paying astronomical rates at a tower, and my expenses basically were cut in half when I bought my own property," he said.

The new office space is professional and "homey" at the same time, Robertson added, and is a more productive work environment because there are no elevators and no long walks to get inside.
"By the time you get to your office and you're actually working in a tower, probably 5 - 20 minutes goes,by" Robertson said. "Here, I walk into my office, unlock my doors, turn on my computer and I'm at it."

While the downtown office market continues to struggle, the smaller suburban developments appear to have no shortage of buyers and users. The entire Fernbrook development is occupied, and Robertson said he still gets calls from prospective tenants.

Ficek said the glut of office space in downtown Min- neapolis (21.3 percent vacancy rate including sublease space) isn't a big concern for town office providers be cause the downtown spaces typically are geared toward larger businesses. "We're catering to the small business guy - the one with three, four, five, six people in his office,"he said. "...And some people just don't want to be downtown." Tom Dunsmore, a town office developer who works out of Inver Grove Heights, said the town office rnarket is going strong now because interest rates are stilI low and banks are receptive to the projects.
But that's no guarantee that the market will stay that way, he warned.

" A year from now - you just don't know," he said. "I see people coming behind me paying more for land, and automatically that adds to the cost of the building. And if the market swings a little bit, then those become less desireable." •