Last week, St. Paul city officials hailed the restoration of the skyway link over Fifth Street between the University Club and the Alliance Bank Building in the downtown area.
What remains to be seen is whether they will have a chance to celebrate a “signature” development on the largely vacant block, adjacent to the light-rail transit (LRT) line being constructed there.
The skyway link was temporarily severed last spring to permit the demolition of the vacant Bremer Bank, which was situated immediately north of the University Club (formerly called the St. Paul Athletic Club) at Fifth and Cedar Streets.
As originally planned, the Central Corridor LRT Line was to run down Cedar Street and make a right-angle turn onto Fourth Street.
At the urging of St. Paul officials and their planners, the Metropolitan Council agreed to re-route the line diagonally through the block bounded by Fourth, Fifth, Cedar and Minnesota Streets and locate a station there.
This required the acquisition and demolition of the Bremer Bank building, along with the purchase of several other parcels on that block. The acquisition of the bank alone added $2.65 million to cost of the $957 million LRT project.
The city and its consulting team saw this site as “an unparalleled opportunity for new development in the heart of downtown,” possibly attracting “a high profile national headquarters.”
In their plan, they pictured a glitzy tower rising over the transit station and an adjoining plaza, creating an exciting new urban gathering space.
So far, there haven’t been any nibbles from developers.
“I think that diagonal development definitely will be realized,” says Cecile Bedor, director of the St. Paul Planning and Economic Development Department. “But I don’t think it will happen until the line is up and running.”
Bedor says every city aspires to attract new headquarters companies, but that whatever development occurs on the block “will depend on the marketplace.”
“You have a vision and a dream of what you’d like to see there,” she says. “Whether that’s office or the condo market comes back or it’s a combination of condos and a hotel — whatever it might be — we think the right developer will see the potential for that kind of development.”
At the moment, downtown St. Paul does not suffer from a shortage of office space.
In 2011, downtown had a vacancy rate of 20.2 percent for competitive office space, according to the annual market study [PDF] by the St. Paul Building Owners and Managers Association (BOMA). That was up from 17.9 percent in 2010.
The vacancy rate for Class A space in 2011 was somewhat lower — 14.3 percent.
Bedor says development obviously has been slowed along the Central Corridor and throughout the nation by the stagnant economy and the reluctance of financial institutions to bankroll new projects.
“Lenders aren’t lending as aggressively as the need to,” she says.
In August, the Metropolitan Council researchers reported that commercial, industrial, and public and institutional (CIPI) construction activity [PDF] in the Twin Cities area slumped in 2010 for the fourth consecutive year.
The council said the building permit value total of CIPI construction projects declined from its 2006 peak of $2.2 billion to $610 million in 2010 — a four-year drop of 73 percent.
The contraction in CIPI activity hurt developed suburbs the least while the central cities were the hardest hit, the council said.
Despite the challenging economic conditions, Bedor says, excitement is starting to build as the LRT tracks are laid and stations rise along the corridor.
“Habitat for Humanity is going to put their headquarters along the Central Corridor. Planned Parenthood’s new building is under construction now. We had an outstate developer come in recently to talk about development opportunities along the corridor. So the interest is starting to heat up,” Bedor says.
Once the line begins operations in 2014, she says, “I expect development activity will take off.”