The Status of St. Cloud

New speculative office space has opened in downtown, Bright says, although relatively high vacancy rates have kept overall St. Cloud a tenants’ market. “Businesses with a history of being tenants have constructed buildings looking to occupy them, [and are] building additional space to lease out,” he says. “The problem is that many they targeted as potential tenants also constructed their own buildings, and are in the hunt for renters as well, creating something of a vicious cycle.”

Areas along the city’s West Division and Second Streets that run through the center of St. Cloud from east to west, have been the focus of recent business development and expansion. “We continue to see a lot of interest in that area from restaurant and hospitality-type businesses,” Bright says. “But there’s no longer much land available along Division and Second. If someone comes here looking for three to five sites for a restaurant, for example, they won’t find them, so they have to look at tearing down or renovating, which aren’t always the easiest options.”

One local businessman who hasn’t shied from that redevelopment challenge is Dan Borgert, CEO of B.K. Foley Land and Development in St. Cloud. Over the past two years, Borgert has purchased and renovated 10 buildings in the 800 and 900 blocks of West St. Germain Street—some of which were blighted—in what’s known as the arts district on    the west side of downtown. Borgert’s new exterior facades and interior infrastructure upgrades have already attracted a number of new tenants, including an independently owned Italian restaurant that will open soon, and a portrait photography business. “Our goal was to buy these neglected properties and take them from ‘worst to first,’ so to speak,” Borgert says.

Landing Buyers

As land for commercial development grows more scarce and costly in outlying areas of the Twin Cities metro, more developers and businesses have begun eyeing areas north of Monticello along I-94 as well as St. Cloud itself for potential investment or new facilities. With the growth of suburbs such as Maple Grove, Rogers, Elk River, and Big Lake—and with good prospects for a link to St. Cloud from the Northstar commuter line sometime after 2009—St. Cloud–area businesses may become viable employers for people living in the northwest or northern exurbs of the Twin Cities.

While industrial-zoned land in some second- or third-tier Twin Cities suburbs might run $8 per square foot, for example, in areas near St. Cloud it’s often closer to $4 per square foot, with utilities sometimes already in place. Doran says she recently fielded an offer to purchase land in a Sartell industrial park, about six miles north of St. Cloud, for $2 per square foot.

But St. Cloud hasn’t been immune from escalating land costs, especially in fast-growing parts of town around Division Street, Second Street, and Highway 23. “Costs for commercial land on the west side have been rising, some of which is now in the $17 to $20 per square foot range,” Bright says. “On the east side you might be closer to the $8 to $10 per square foot range, but even that in the past several years has gone up two to three dollars per foot.”