Graco redevelopment may buck recent trends
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Graco's large Northeast Minneapolis campus is on track to sell soon, but don't expect a quick redevelopment of the riverfront property, despite its prime location.
Why it matters: Five to 10 years ago, this 40-acre piece of mostly industrial land would have developers salivating over demolishing warehouses and building housing.
- Yes, but: Times have changed, and multifamily housing development has gone from a gusher to a trickle.
State of play: Fluid handling products manufacturer Graco is relocating to Dayton next summer after nearly 80 years on the river.
- Colliers real estate broker John Breitinger, who is advising Graco, told Axios that the property will be sold by the end of the year, if things go smoothly.
- "We have a letter of intent (with a buyer) and we're working through a purchase agreement," he said.
Zoom in: It's likely, he said, that Graco's industrial buildings, including its 400,000-square-foot warehouse along the river, will remain because the demand for industrial space is still strong in the Twin Cities.
- Leasing out the industrial buildings would provide a buyer with cash flow, allowing them to be patient while developing housing later on. There's plenty of acreage of surface parking or grass for those projects.
Breitinger said that while there's plenty of demand for more housing in the area, construction costs are too high and financing too difficult to find for the thousands of units some might like to see right away.
- He said he's tracking 34 large-scale development sites in the metro area and "most of them are kind of stuck right now, one way or another."
Case in point: Real estate industry group NAIOP held its annual University Challenge, in which it invites college students to propose ideas for a prominent site.
- This year, regional college groups had modest proposals for the site, typically opting to preserve the industrial buildings while developing 300-400 apartments and a small amount of retail.
What they're saying: City Council member Michael Rainville, who represents the area, said he will support housing development.
- "That is such a big piece of land," he said. "There's an opportunity to add some more green space, and then to have dense housing, as well as probably some supportive retail services for that dense housing."