MIDDLE MARKET HIGHLIGHT, DECEMBER 2005

ST. CLOUD

Situated along Interstate 94, St. Cloud has emerged as a diversified business center in the last 10 years. As the largest metro area in central Minnesota, St. Cloud's service-related and retail businesses draw consumers from a 60-mile radius.

Industrial and manufacturing facilities are currently the hottest segment of the commercial real estate market. “As the economy has strengthened, a pent-up demand, catalyzed in part by a state incentive program known as JOBZ, has spurred expansions in some of our major industrial parks,” says Bruce Thielman, executive director of the St. Cloud Housing and Redevelopment Authority. JOBZ, which was passed in 2004, stands for Job Opportunity Building Zones and provides state and local tax abatement for new and expanding businesses throughout Minnesota.

Arctic Cat, one of the nation's leading manufacturers of all-terrain vehicles and snowmobiles, has decided to keep its headquarters in St. Cloud and is building a new engine manufacturing plant. Located in the I-94 Business Park, Arctic Cat currently has a 56,000-square-foot facility that will eventually be expanded to 200,000 square feet. Also in the I-94 Business Park, Creative Memories, a scrap-booking company, completed a 316,000-square-foot building in 2004 and has plans to expand its facilities in the next 2 years. Gold Leaf Plastics is relocating from a nearby community and recently purchased 8 acres for a new headquarters building and manufacturing plant. Construction on the 80,000-square-foot building will begin in early 2006.

On the other side of town, the new 350-acre Airport Business Park is also seeing activity. The Donlin Company, a window and door manufacturer and distributor, relocated from the central business district in 2005. The company built a new 100,000-square-foot building on 10 acres. Local developer P-Ike Development LLC will build three 20,000-square-foot speculative buildings in the park in 2006.

Activity is also brisk outside of the business parks. Woodcraft Industries, another window and door manufacturer, is expanding its existing facility in east St. Cloud by 56,000 square feet. Arctic Cold Storage is currently building a 72,000-square-foot expansion to its existing facility in south St. Cloud at the intersection of I-94 and County Road 75.

Also, St. Cloud's downtown area is beginning to experience a resurgence of interest, according to Pegg Gustafson, executive director of the St. Cloud Downtown Council. “We have seen more activity in downtown in the last 6 to 9 months than we have seen in the last 4 to 5 years,” Gustafson says. In 2006, a new $30 million library will be built and a downtown green area, Lake George Park, will be refurbished. The Federal Building has been sold to a tech company and will be redeveloped for office use.

Thanks to an active and creative Housing and Development Authority (HDA), affordable housing projects are springing up in all quadrants of the St. Cloud market. “We use tax increment financing and state money from the Challenge Fund to keep costs down so that we can build affordably priced single-family and multifamily communities that supplement traditional homes,” notes Bruce Thielman, HDA's executive director. On the south side of St. Cloud, phases I and II of Swisshelm Apartments have been completed, consisting of 64 units. Downtown, an existing building along the Mississippi River is being rehabbed into the Riverside Apartments. When completed, the building will have 85 units that cater to the active adult market.

Also under development is a Veterans Affairs (VA) housing project that will comprise 60 studio units, designed to assist veterans with affordable rents. “To provide for the specific needs of veterans, supportive social services will also have offices in the apartment building,” Thielman says. In the western quadrant of St. Cloud, HDA is developing Westwood Village, perhaps its most ambitious development to date. Covering 60 acres of a 360-acre site, the project consists of 80 single-family homes and 84 townhomes that are completed and sold, 96 apartment units that are approximately 70 percent completed, and a 60-unit rental senior housing property that is under construction and 60 percent leased. “This community is in an area of St. Cloud that has been under-developed,” Thielman notes. “We began this project in 2002 with the creative vision that we would build the first major development in the area and that the area would be built up around us.”

With a central location, a reawakening downtown and creative economic incentives, the outlook for St. Cloud and the surrounding communities is optimistic.

©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.