MIDDLE MARKET HIGHLIGHT, DECEMBER 2005

DULUTH, MINNESOTA

Duluth, the largest city on Lake Superior, is one of the top five ports in the United States and the furthest inland port of the Great Lakes Seaway. Until World War II, Duluth was primarily a manufacturing city. Today, the statistics have changed and 95 percent of the economic base is in the services sector. Two quickly expanding business sectors, the healthcare and hospitality industries, are spurring growth in Duluth's downtown.

St. Mary's Duluth Clinic is expanding its downtown hospital and health center. The $75 million expansion will include the addition of a new building set to open in April 2006. To accommodate St. Mary's growth, an $11.5 million parking ramp and skywalk are currently under construction. When completed, the skywalk will connect St. Mary's Duluth Clinic to other downtown venues.

Duluth is a busy convention city and is home to one of Minnesota's two convention centers. To accommodate this booming business, Sheraton began construction of a new $40 million hotel in October. Located in the heart of downtown, the new hotel will have 140 guestrooms, and a private developer is building 35 high-end condominiums on the remaining floors above the hotel.

Also in downtown, Jim Jarochi is renovating several small buildings at the corner of Lake Avenue and Superior Street into a handful of exclusive condominium units in the $500,000 range. These buildings will connect into the St. Mary's skywalk system.

Marine Iron and Shipbuilding Company is renovating a 300,000-square-foot building that sits at the westernmost tip of Lake Superior. Originally built as a seven-story warehouse and manufacturing facility in 1893, the building is currently being used as an all-suites hotel. The renovated project, named Waterfront Plaza Condos, will incorporate the 107 existing hotel rooms managed by Hawthorne Suites, and 30 existing residential suites between 1,200 and 1,900 square feet. On the top three floors of the building, 40 new condominiums will be built, with floor plans beginning at 2,000 square feet. The top floor will feature two-level units with skylights. The façade of the building will also be redone as part of the renovation. The property will feature three restaurants, including Old Chicago Pizza and Red Lobster. According to Bill Meierhoff, president of Marine Iron and Shipbuilding and the designer of the condo units, “Sales are going great. We have already sold out several floors and primary construction just began in November.” Units should be ready for occupancy in spring 2006. Holm Construction of Duluth is the general contractor.

“The quality of life in our neighborhoods is excellent, and our downtown is strengthening,” says Tom Cotruvo, executive director of the Duluth Economic Development Authority. “As the convention, retail, education and medical hub of northwest Minnesota, we are very optimistic about our future and we expect to see continued growth in all sectors.”

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