The Dayton's Project: Surveying the 2020 Development Landscape
Although the CRE world is never static, there are some mixed signals that deserve closer examination as the new year gets underway. A one-day event planned for March 12 at The Dayton's Project, 700 Nicollet Ave. in downtown Minneapolis, will focus on topics that anyone involved in commercial real estate, building, leasing or development in the Twin Cities won't want to miss.
Touching on topics that range from zoning concerns to modular construction to the effect of tariffs on the cost of materials, individual speakers and panels will consider the hard questions and try to find consensus about how to deal with challenges.
Scheduled speakers will include Shauen Pierce, director of economic development and inclusion policy for the city of Minneapolis; Matt Rauenhorst, vice president of Opus Development Company; Lander Group Founder Michael Lander and Ari Parritz, Vermilion development manager. Additional speakers are anticipated. Discussion moderators are Larkin Hoffman shareholder Chris Yetka and Jerod Rudolf, structural steel specialist with the American Institute of Steel Construction.
The program begins at 8 a.m. with a coffee and networking session. The first discussion on Modular Construction: Everything You Need to Know, is scheduled at 9 a.m., followed by How to Make New Development and Re-development Pencil in 2020, a look at how to navigate rapidly rising labor and material costs. The day will conclude with a second networking session. Cost for the Twin Cities Construction and Development Boom Conference is $99.
It promises to be an exciting program.
The Development Dilemma
Sponsored by The Dayton's Project, the half-day program will consider the economic impacts of new construction and redevelopment, with an emphasis on modular construction, and explore the better ways to deal with rising labor and materials costs. Minneapolis has been fortunate in recent years, with a record of multiple large project starts during the past few years. Although there have been challenges along the way, including rising costs, labor shortages, and construction delays, more are in the planning stages. The prevailing local attitude continues to be buoyant and optimistic.
On the positive side, multi-family development is booming; supply has generally kept pace with the numbers of new residents moving into the area. A negative, however, is that prices continue to rise. Minneapolis last year became the first city in the nation to alter its zoning, eliminating single-family neighborhoods in an effort to encourage more affordable housing throughout the city.
Mixed-use development, including new high-rise towers in unlikely neighborhoods, is also vibrant and healthy. New office buildings are under construction in the urban core, as well as a number of redevelopment projects planned throughout the city and in close-in suburban areas. Many have enjoyed pre-completion leasing success, but absorption in some areas has lagged, and frequent construction delays have been disappointing.
In general, though, the forecast for the future is positive, even though slower growth is predicted in 2020 and beyond.
The Dayton's Project
Now scheduled to open to the public this spring, construction began on the landmark building in the heart of Minneapolis three years ago. Demolition was completed the following year, paving the way for a dramatic redo, to convert the former department store into a modern multi-use space. It was not accomplished without some serious roadblocks and delays. A prime goal of the redevelopment project was to both honor the past and preserve the history of the iconic building. Some existing interior features were retained, including the Art Deco bathrooms, but at the same time, the iconic building's functional systems were updated to serve the needs of 21st-century tenants.
The project's development team, spearheaded by Telos Group and 601w Companies, consulted with local leaders as well as with state and federal agencies to formalize the ambitious plan. The historic Dayton's building is listed on the National Register of Historic Places, and is one of the features of the city's redesigned Nicollet Ave., the acknowledged "Main Street" of Minneapolis for more than 100 years.
The 12-story building, last occupied by Macy's, encompasses over 1.2 million square feet. It will now feature, instead of a vast shopping emporium, modern office space loaded with tenant amenities, a futuristic 45,000-square-foot food hall and market, multiple restaurants and retail spaces.
Corporate tenants can offer office workers the availability of a green rooftop terrace with skyline views, library and lounge spaces available for exclusive use, and a modern health club as benefits. The building is also connected to the city's skyway system.
Looking Back, and Forward
Four years ago, mayors across the nation identified economic development, specifically business and job growth, as the Number One concern for their communities. Those topics are, once again, at the top of the list of concerns for cities large and small across America. It was an election year, characterized then, as now, by divisiveness and acrimony on the national level. In their "State of the City" addresses in 2016, the majority of mayors cited a need for local solutions, and called for innovation. Once again, especially in the Twin Cities, that is the order of the day.
In all the right areas, Minneapolis has made great strides: Transportation, community awareness, infrastructure, sustainability, demographics and diversity, and budgetary controls. The Minneapolis 2040 Plan, adopted in October 2019, is a shared vision for the future of the city that grew out of a two-year discussion by local people, business owners, residents and governing officials. It has particular significance for continued growth and development in the city, defining goals of "equitable access to housing, jobs, and investments."
If one were to list the primary challenges facing Minneapolis today, it would probably look much the same as the 2016 list. Rounding out the top five, after economic development, overriding concerns for most cities include public safety, financial strength and fiscal responsibility, infrastructure and education. Minneapolis scores high in the area of education, with a highly educated and well-trained pool of candidates to support new business development, including a healthy entrepreneurial climate.
The upcoming program represents another way for the development and commercial real estate communities to join forces for the future of this city. No doubt it will not be the only, or the last, such program in coming months.