MIDDLE MARKET HIGHLIGHT, NOVEMBER 2007

Duluth
Dan Marcec

Duluth, Minnesota, recently approved a comprehensive land use plan — which happens to be the first in approximately 50 years — and the city expects to see significant growth and development spurred by this new plan of action. The future of real estate usage in Duluth will be directed by this plan, as the region currently is in need of more shovel-ready and light commercial space. By providing opportunities in the retail, commercial and residential sectors, the land use plan should create a healthy climate for economic development to grow where it will be most effective.

With vacancy in the commercial market already at less than 10 percent, the market is in good shape. In addition, a number of commercial developments recently have been completed, including expansions in the healthcare industry, as St. Luke’s Hospital and St. Mary’s & Duluth Clinics (SMDC) both have grown. Further, Cirrus Aircraft has expanded by 110,000 square feet and Northstar Aerospace has built an additional 30,000 square feet.

“All in all, commercial real estate is doing nicely here,” says Rob West, president and CEO of the Area Partnership for Economic Development (APEX). “Land prices are still reasonable and there are several incentives to expand in Duluth, including JOBZ, training initiatives, low cost loans and an exceptional workforce.”

As is indicated by its recent expansion, healthcare is the largest private sector in Duluth, employing approximately 12,000 workers in the region and 6,000 in the city of Duluth proper. Cirrus has spurred development in its support industries by its growth, and heavy equipment manufacturing is on the rise along with precision machining. In addition, the transportation sector is pushing forward alongside the Duluth Seaway Port Authority’s best year in history in terms of tonnage moved. Taconite and forest products are strong, and a huge boom in refining is on the horizon from Murphy Oil and Enbridge Pipe Lines, which are both located in nearby Superior, Wisconsin.

“APEX is working on 26 deals at this time that have the potential to employ 1,200 people with a payroll of $52 million, and we expect to close a full third of that in the next 12 months,” West says.

With respect to specific projects on the horizon, the University of Minnesota-Duluth has undertaken a $17 million expansion for its new Labovitz School of Business, and SMDC has invested $90 million in a new cancer center. Furthermore, there is $6.5 billion in expansion plans on the Iron Range, and Minnesota Steel is going forward with $1.6 billion worth of activity, planning to employ 700 more steel workers. All of the above development is contributing to the healthy commercial and economic climate in Duluth that should conitnue in the coming years.



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