The Lay of the Land

Because of the dearth of vacant land and the escalating costs of raw materials for new construction, more developers are looking at remodeling existing buildings inside the loop for retail or office purposes. Rausch, for example, recently brokered a deal where a developer bought a 100,000-square-foot industrial building in St. Paul owned by Modine Manufacturing of Racine, Wisconsin, then refurbished the building, in part, for retail use.

Other local developers have purchased land inside the loop with thoughts of redeveloping when the market turned around. CSM Corporation did that when it bought the old H. B. Fuller site and building on Energy Park Drive in 2000. CSM eventually tore down the building and constructed a new $12 million facility for Secure Computing, a computer software and security products company formerly based in Rose-ville that was seeking expanded office and warehouse space.

Mixed Use Grows Apace

Mushrooming land costs and a call from city governments for high-density development continue to spur horizontal and vertical mixed-used developments around the metro, with new projects joining the ranks of the Excelsior and Grand project in St. Louis Park, Grande Market Place in Burnsville, Arbor Lakes in Maple Grove, and others. Communities see in these projects an opportunity to serve both residential and commercial constituencies, fortify a tax base, ease local transportation burdens by putting residential, commercial, and retail space together, and build a stronger identity for their downtown areas.

Such density usually doesn’t come cheap. Large-scale, vertical, mixed-use projects, where builders stack condominiums or apartments on top of retail development, can be more expensive than horizontal mixed-use developments because of added costs for things like structured parking facilities rather than surface lots. Tax increment financing—a way of using the increased property taxes that a new development generates to finance the cost of the development—or local government funding often can be tapped for development assistance.

Smaller-scale mixed-use developments continue to sprout up around the Twin Cities as well. Collin Barr, an executive vice president with Ryan Companies US, Inc., a Minneapolis commercial real estate company, says some developers are converting vacant lots and obsolete corner gas stations in urban areas into new mixed-used facilities. Greenleaf Lofts at the corner of Nicollet and Franklin Avenues in Minneapolis, a project of Minneapolis-based Master Development Group, LLC, is one such project. It features street-level retail anchored by a Starbucks and three floors of residences above.