Two Hayfield investors purchased the Professional Building in downtown Stewartville for $775,000 in May 2025. The 7,600-square-foot property includes eight units and signals growing confidence in small-town commercial real estate as Rochester’s economic growth extends to surrounding communities.
Why would seasoned investors pay $775,000 for a downtown commercial building in a town of 6,100 people? The answer reveals a shifting trend in commercial real estate. While major cities grab headlines, smaller markets like Stewartville are attracting serious capital from investors who see opportunity where others see risk.
Nick Matti, a former Mayo Clinic nurse, and Trevor Anderson led an investment group that closed on the Professional Building at 100 Second St. SE on May 1, 2025. Both men grew up in Hayfield and understand the local market. This purchase marks their entry into commercial real estate, but it likely won’t be their last.
Why Hayfield Investors Chose Stewartville
Location drives real estate decisions. Stewartville sits just 10 miles south of Rochester, Minnesota, home to the world-famous Mayo Clinic. Rochester’s Destination Medical Center initiative is expected to create 35,000 to 45,000 jobs over 20 years and draw $6 billion in private investment.
Matti explained their strategy: “We like Stewartville as sort of a secondary location for people that might want something a little bit more inexpensive than having their business inside of Rochester. We like the growth that is coming to Rochester, and we’re seeing that bleeding into the surrounding areas, like Stewartville”.
The numbers support their thesis. Amazon and biotech firm United Therapeutics have purchased land and built facilities in Stewartville’s Schumann Business Park. This industrial growth creates demand for supporting services, exactly the type that fills downtown commercial buildings.
The Professional Building: A Smart Investment
The 46-year-old building offers 7,600 square feet across eight tenant units. Six units were already leased at purchase, including Charlie Brown PC Applications Consultants, 507 Family Chiropractic, and Overby Orthodontics.
The property’s financial structure reveals careful planning:
- Purchase price: $775,000
- Previous sale: $675,000 in April 2024
- Olmsted County market value estimate: $661,800 for 2025-2026
The investors paid above market value, but they bought immediate cash flow. Six occupied units generate income from day one. The remaining two units offer upside potential through new leases or renovations.
Small-Town Commercial Real Estate Gains Traction
Victor Calanog, Global Head of Research and Strategy at Manulife Investment Management, noted in 2025 that the commercial real estate industry “appears that the landing will be relatively soft, so that should mean continued positive momentum for economic activity, benefiting leasing and income drivers, including rents and occupancies”.
Through the beginning of 2025, new loan volume increased by 13% from the end of 2024 and over 90% from the same time last year, marking a recovery in lending activity to levels not seen since early 2023. This improved access to capital makes deals like the Stewartville purchase possible.
Retail trade sales were up 3.3% from May 2024 to May 2025, according to the U.S. Census Bureau. Strong consumer spending supports retail tenants, a key component of mixed-use commercial buildings.
Investment Strategy Behind the Purchase
Matti outlined their long-term vision: “We have been looking around at things for about a year. Our eventual goal is to do bigger deals and help people to invest their money into something that could earn them a better return than in the stock market”.
This approach mirrors a broader trend. Investors with local knowledge target secondary markets that larger funds overlook. They can move quickly, understand tenant needs, and build relationships that institutional buyers can’t replicate.
The Hayfield group’s strategy includes:
- Starting with cash-flowing properties
- Building track records through successful management
- Scaling to larger deals as capital grows
- Offering investment opportunities to local investors seeking alternatives to traditional markets
Rochester’s Growth Drives Demand
Stewartville’s appeal stems directly from Rochester’s expansion. Rochester’s Loam Commercial Real Estate represented both buyers and sellers in the transaction. The brokerage specializes in connecting regional buyers with properties positioned to benefit from Rochester’s medical and technology sectors.
Commercial property in downtown Rochester commands premium prices. Businesses serving Rochester’s workforce but requiring lower overhead find Stewartville attractive. The 15-minute drive offers significant cost savings without sacrificing access to Rochester’s market.
Professional services, healthcare support businesses, and technology consultants are natural tenants for the Professional Building’s location. These businesses need professional office space but don’t require downtown Rochester addresses.
What This Deal Signals for Small-Town Markets
The Stewartville purchase illustrates several emerging trends in commercial real estate:
Secondary Market Appeal: Smaller metros showed rising absorption in 2025 as offices migrate to cheaper secondary markets. Stewartville fits this pattern perfectly.
Local Investor Advantage: The Hayfield investors’ familiarity with the area gave them confidence to act. They understand traffic patterns, know the tenant base, and grasp growth trajectories that data alone doesn’t reveal.
Stabilized Properties Win: In uncertain markets, investors prefer properties with existing tenants and proven cash flow. The Professional Building offered both, reducing risk despite the above-market purchase price.
Challenges and Opportunities Ahead
Small-town commercial real estate presents unique considerations. Limited tenant pools mean vacancy can last longer than in larger markets. Economic downturns affect smaller communities more severely than diversified metros.
However, opportunities balance these risks:
- Lower competition for quality properties
- Stronger tenant relationships in tight-knit communities
- Potential for significant value creation through property improvements
- Less institutional capital creates pricing inefficiencies
The demand for affordable housing continues to outweigh supply, creating opportunities in 2025. Commercial property owners in growing small towns can potentially convert or redevelop spaces to meet this demand.
Looking Forward: More Deals Coming?
Matti, who also owns an online health coaching firm called F1TxMIND Fitness, positioned this purchase as the first of many. The investment group’s model of pooling capital for commercial real estate acquisitions suggests they’ll continue seeking similar opportunities.
Stewartville’s industrial park expansion should drive additional commercial demand. Workers need places to eat, shop, and access services. The downtown core benefits directly from industrial growth on the town’s periphery.
The Professional Building purchase may encourage other investors to examine secondary markets near major medical and technology hubs. Similar patterns exist across the country, wherever tier-one cities’ growth spreads to surrounding communities.
FAQs
Why did the investors pay above the county’s market value estimate?
The $775,000 purchase price exceeded Olmsted County’s $661,800 valuation, but the investors bought immediate cash flow from six occupied units. They valued income-producing potential over the county’s assessment.
What makes Stewartville attractive for commercial investment?
Proximity to Rochester’s Mayo Clinic, lower costs than downtown Rochester, recent industrial development, and highway access make Stewartville appealing for businesses and investors.
How does this deal compare to typical commercial real estate transactions in 2025?
The purchase aligns with trends favoring stabilized, cash-flowing properties in secondary markets. Investors increasingly seek properties with existing tenants rather than development projects or troubled assets.
What types of businesses work well in downtown Stewartville commercial space?
Professional services, healthcare-related businesses, technology consultants, and companies serving Rochester’s workforce without needing premium downtown addresses perform well in Stewartville.
Could this investment model work in other small towns?
Yes, but success requires similar conditions: proximity to a major employment center, active economic development, reasonable property prices, and investors with local market knowledge.
