– Finance & Commerce
The snow is still falling, but across Rochester old buildings are being torn down, construction fences are going up, and developers are securing building permits for an array of projects on the drawing board for the 2018 building season.
Much of that construction is related to the first projects tied to the Destination Medical Center. The $5.6 billion, 20-year public-private initiative aims to build upon Mayo Clinic’s success and create a world-class hub for medical and biotech industries.
“It’s going to be a very busy year,” said Patrick Seeb, director of economic development and placemaking for the Destination Medical Center’s Economic Development Agency.
It’s also going to be an important year, Seeb said. Many of the projects are buildings that will have a lasting impact on the city, he said. And many of the projects are being led by Twin Cities developers, backed by financing from metro and national players.
“That’s a really important thing, to have new investors getting involved in the community,” he said.
Golden Valley-based M.A. Mortenson Co. got a head start, breaking ground last November on Discovery Square in downtown Rochester. Foundation work is underway on the $35 million, 90,000-square-foot building on a site that fills the block bordered by Fourth and Fifth Streets Southwest and Second and Third Avenues Southwest.
The building, to be anchored by Mayo Clinic, will house laboratory space, offices and retail.
Last year set a high bar for development. The Rochester Building Safety Department in 2017 approved 2,665 residential and commercial permits totaling $524.7 million, a new record for a single year. The total topped the $442.8 million in permits issued in 2016, and was a dramatic increase from the 2012 total of $328.5 million.
The first project to start in 2018 appears to be the $125 million mixed-use tower Minneapolis-based Alatus LLC will build across the street from Mayo’s St. Marys Hospital campus. Alatus has assembled and cleared 14 parcels to create the 2.77-acre site in the 1400 block of Second Street Southwest. This month it closed on the financing and submitted permits for the 13-story tower, and this week it’s picking up permits to begin excavation and foundation work.
The project, a familiar design in the Twin Cities, is set to include 310 apartments and 37 townhomes as well as a restaurant and 24,000 square feet of retail space. Amenities include a third-story rooftop pool, fire pits, grilling stations, an indoor sauna, work-from-home suites, private entertainment spaces, fitness center and a four-season outdoor dog oasis.
“It’s a gateway into Rochester, right off Highway 52 coming into the city,” Seeb said. “It’s also going to be home to 350 families. Many of these are people who will be working across the street or down the street at the other campus.”
Seeb emphasized that the city has a lot of traditional neighborhoods close to downtown and has seen growth in traditional apartment buildings. Alatus offers another option.
“It adds a new contemporary housing product,” he said.
Chris Osmundson, development director for Alatus, credits the DMC initiative and the cooperation of the city and the state with helping investors see the area in a new light.
“Territory that used to be flyover country is now seen as a viable option,” Osmundson said.
For example, it can be tough to get investors to consider a city of 100,000, but that’s changing.
“The city of Minneapolis and Rochester, from a demographic standpoint, have a lot in common,” he said.
Many developers who have seen the value of the community for a long time are returning with new projects this year as well.
Sioux Falls, South Dakota-based Stencil has submitted building permit applications for its four-story, 164-unit Technology Park Apartments. The $19 million project is set for a 4.93-acre site on Technology Drive Northwest, in a largely industrial area two blocks west of the IBM campus.
About 40 percent of the units would be affordable to renters earning 60 percent of the area median income. It will include a fitness trail, half-size basketball court, tot lot, open green space and a dog park.
It’s too early in the year for city officials to tabulate exactly how many projects will start construction this year, said Greg Johnson, senior planner for the Rochester Olmsted Planning Department. For example, the Alatus project originally was set for construction in 2017, but assembling a site and financing took longer than expected.
The good news is that major projects already are in the pipeline for construction in 2019, about the time today’s projects will be wrapping up.
By: Anne Bretts
Date: Feb 22, 2018
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