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The six most prominent pieces of underused real estate in the Twin Cities

Welcome to this year’s roundup of the most conspicuous undeveloped (or underdeveloped) lots in Minneapolis and St. Paul — and what the future holds for them.

Two cities, six sites.

Welcome, once again, to MinnPost's examination of the most conspicuously underused parcels of land in the Twin Cities: sites located along well-traveled streets or that make appearances in the news but that have, so far, not attracted development plans.

The sites on the this year's list are now either underused, unused or in uses that might not make sense anymore. Some hold parked cars or plowed snow, storage containers or discount stores. We'll look at why they've proven immune to development so far, and what lies ahead for each. 

The Twin Cities’ most prominent pieces of underused real estate, 2017

ST. PAUL

The property: West Side Flats
The location: just east of Harriet Island 

In his architectural guide to St. Paul, Larry Millett recalls the history of the riverfront area known as the West Side Flats. It was, he writes, a floodplain that faced frequent inundation from the Mississippi. “For this reason, the flats attracted mostly poor immigrants — Germans and Irish, followed by East European Jews and Mexicans,” Millett wrote. “There was once a complete urban world here that included homes, apartments, churches and synagogues, schools, stores, restaurants and saloons.”

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All that disappeared after an especially devastating flood in 1952, after which it was replaced with a handful of commercial and industrial buildings behind a new levy in what was dubbed the Riverview Industrial Park.

But now, city planners are hoping an updated master plan and a push by the Housing and Redevelopment Authority might create a 21st Century version of that historic urban world.

The master plan, which calls for the breaking up of large superblocks and a return of the historic street grid, also foresees a greenway running from near Plato Boulevard to the river that will provide both open space and a system for centralized stormwater collection and filtration. While still a few years away, the greenway has already received an $800,000 grant from the Met Council.

“The West Side Flats is one of the most exciting potential development sites in the entire city right now,” said Council Member Rebecca Noecker, who has been involved in planning for the area even before she took office in 2016. She cited its proximity to downtown and the river, the large amount of undeveloped and underdeveloped land and it’s history.

“Frankly, I think it is one of the most-shameful periods in our city’s history, when we decided to completely destroy the rich neighborhood fabric that had been there for so long,” Noecker said.

The core of the planning area is 40 acres bordered by the river, Wabasha Street, Plato Boulevard and Robert Street, though the broader master plan covers 120 acres and extends to Lafayette Road (Highway 52). A mixed-use neighborhood is envisioned, and Noecker compared the locale to the St. Anthony Main neighborhood in Minneapolis.

West Side Flats
MinnPost photo by Peter Callaghan
Council Member Rebecca Noecker: “The West Side Flats is one of the most exciting potential development sites in the entire city right now.”

A new apartment building opened along Wabasha in 2014 and the city is partnering with the developer of that building, Sherman Associates, on another housing project closer to the river. That two-building project, with 264 units of both market rate and affordable housing — will include commercial spaces including a restaurant with views of the river and downtown St. Paul, and the project received an affordable housing grant from the Met Council last month.

Another project, this one by Weidner Apartment Homes, would create 700 units on land between Fillmore Avenue and Plato Boulevard, where State and Met Council environmental grants are helping clean up what is a brownfield. 

That recent history shouldn’t define the value of the land and its potential, Noecker said. “I’m forward looking about the potential for the land, not backward looking,” she said. “So the fact that nothing has happened here to date, for example, is not a compelling reason to assume that nothing is going to happen in the future. I really want to make sure we are not undervaluing that piece of HRA-owned riverfront property.”

The property: Central Station
The location: 5th Street and Cedar Avenue, downtown

When preparing for construction of the Green Line through downtown St. Paul, the preferred alignment required tracks to get from Cedar Street to 4th Street East. To make that angle easier to negotiate and to make room for the primary downtown station, Met Council and the state Department of Transportation bought up most of the block, including what had been a bank building at Cedar and 5th Street East.

Including a lot owned by the St. Paul Housing and Redevelopment Authority, various government entities now own everything on the block but the St. Paul Athletic Club building. And now that the Green Line has been completed and running for more than two years, the property has moved to the top of the list of transit-oriented-development sites controlled by the Met Council. Both the council and the city want the property developed commercially.

“That block is the critical piece of our central business district,” said Council Member Noecker. “The fact that it’s currently sitting there as a muddy triangular field is not acceptable to me.”

Jon Commers, a Met Council member from St. Paul, said despite the location, it often gets overshadowed by the activity in Lowertown and near Rice Park. But, he said, “there is conversation and interest in the development community,” notwithstanding what he calls “a short list of issues.”

Like what? Three different public entities own pieces of the block. There’s also an agreement dating back to when the land was purchased for light rail that gives the previous owner the right of first refusal if the land is used for anything other than transit.

Central Station
MinnPost photo by Peter Callaghan
Council Member Noecker: “That block is the critical piece of our central business district.”

Then there’s issues of getting preliminary engineering, environmental work and appraisals done before all those governments can agree to push the site out to the market. And because some federal transit money was used for site acquisition, whatever is built on the site needs federal approval and must increase ridership on adjacent rail and bus lines.  

Despite all of the moving pieces, Lucy Galbraith, director of transit oriented development for the Met Council, said she is hoping to have the site ready to offer to developers sometime during 2017.

“I always lay out a timeline, even if it’s aspirational. It helps me focus and push on all the things I actually control, as opposed to all the pieces I can’t,”  Galbraith said. The council staff has done preliminary engineering sketches to determine how a building could exploit the entire site.

“If you go up far enough to clear the trackway, incorporate the skyway, and make sure you have fire stairs and all the other fun stuff, then you get a pretty big floorplate. Assuming the market still supports it, you could go 10-to-20 stories. That’s our pretty ambitious goal.”

In the meantime, the Musicant Group is working on ways to help “activate” the area along with the skyways that lead to it. Between now and the end of summer, there will be both active and passive activities to bring more people outside and into the skyways above. The work is paid for with a grant from the John S. and James L. Knight Foundation.

The property: the St. Paul Sears store
The location: just west of the state Capitol

There was a time when Minnesota United owner Bill McGuire thought a piece of property between University Avenue and I-94 would make a good site for a soccer-specific stadium. No, not THAT property between University and the freeway in Midway, where he would end up building United's new home, but the Sears store property east of Marion street and west of Rice Street.

“Any word on Sears?” McGuire asked then-economic development director Cecile Bedor in 2013, when he was in informal conversations with St. Paul officials about locations for his then-lower-division soccer team. “Saw they had a terrible corporate earnings again, so seems like a sale/redevelopment of the property (without keeping Sears itself) might have some attraction.”

At the time, Sears still owned the store, along with an auto center and surrounding sea of parking. It was talking to the City of St. Paul and others about leading its own redevelopment with additional retail plus office and residential buildings, all of which coincided with construction of the Green Line, which would include a station at Rice Street.

Since then, Sears’ attempt to monetize its properties around the country took a different tack. It spun off a new company called Seritage Growth Properties — a real estate investment trust — and sold $2.5 billion worth of Sears and Kmart property around the country to the new company. Sears leases the St. Paul store from Seritage.

Last summer, a Sears spokesman told the Pioneer-Press that Seritage has a right to “recapture” space now leased to Sears, i.e. kick the store out. That could happen if Seritage has development deals to repurpose some or all of the existing buildings or construct new buildings in the parking areas.

The Sears store property east of Marion street and west of Rice Street.
MinnPost photo by Peter Callaghan
The Sears store property east of Marion street and west of Rice Street.

According to thestreet.com, Seritage has been using rent payments to reinvest in underperforming stores and shopping centers. One example is a former Sears at the King of Prussia mall near Philadelphia, which now houses two chain restaurants, plus a Primark clothing store and a Dick’s Sporting Goods.

Could any such change come to the St. Paul store? Seritage does include it on its website as a development opportunity for “shopping center/freestanding location” with a brief description of the population and average household incomes of those living within 3 miles, 5 miles and 10 miles.

Seritage did not respond to requests for interviews about the site. The city knows little about the company’s intentions for the 17-acre site, which sits near both light rail and the freeway, and has views of downtown, the state capitol and the Cathedral of St. Paul. “It’s a big site,” said current St. Paul Economic Development Director Jonathan Sage-Martinson, “Sears and its development arm had talked about infill development in the past and the city would be very excited about that.”

MINNEAPOLIS

The property: the Ramada site
The location: just west of the Greyhound station, downtown

It is one of a trio of parking lots on the southwestern edge of downtown Minneapolis, a vast stretch of parked cars (and now snow piles) from the Salvation Army complex to the First Baptist Church.

Bordered by N. 11th and N. 10 streets and Hawthorne Avenue, it once held a Ramada Inn that has its own storied history (something about it being a clubhouse for a monthly gathering of swingers). The ghost of the hotel also provides the economic reason why, of the three lots, it is most-likely to see a different use than parking. 

The parcel, along with the parking lot across the street between Hawthorne and Hennepin avenues, are owned by a Las Vegas-based company that owns and operates parking lots. And while the company prefers for now to keep the Hennepin lot for paid surface parking, it sees more potential for the Hawthorne lot, which isn’t as useful for parking. One reason is because of City of Minneapolis ordinance that prevents developers from tearing down buildings and using the land for parking. So while parking can be rented on what had been parking for the inn, the outline of the hotel foundation must be kept car free, leaving its best use as snow storage during the winter.

The land once held a Ramada Inn
MinnPost photo by Peter Callaghan
Bordered by N. 11th and N. 10 streets and Hawthorne Avenue, the land once held a Ramada Inn.
That parcel, along with two adjacent properties at the corner of 10th Street North and Currie Avenue North, are being offered for $6.95 million.

Nick Carmichael, the co-founder of Capital Commercial Partners, which has been marketing the parcel, said he has received interest from potential hotel developers who wanted part of the large parcel along Hawthorne but not the entire property. One hotel developer is now willing to take all of the parcels — something preferred by the seller — and re-sell the smaller lots. Another developer talked about buying the entire block and working with a hotel developer for some of the land and putting housing on the rest.

“I think we’re very close,” he said of the overall sale. “I haven’t gotten a full asking price but we’re close to getting somebody committed to the site.”

The property: the Nicollet-blocking Kmart
The location: Lake Street and Nicollet Avenue

The City of Minneapolis would really like to make a deal with Kmart, which owns the store currently blocking Nicollet Avenue before it reaches Lake Street. It is already a neighbor of the store, which is located at 30 W. Lake St. (and is now owned by Sears). That happened last fall, when the city purchased one of the parcels that makes up the Kmart shopping center, which is sometimes known as the SuperValu parcel, for $5.3 million.

And the city just might be Kmart’s landlord, if the city council decides to follow through with a $7.2 million purchase option for the land beneath the store. That’s a decision that must be made by fall of 2017. But if the city balks, it would lose the $800,000 it put down in a non-refundable option to purchase.

But the city doesn’t want to be a landlord. It wants Kmart to agree to allow the city to reopen Nicollet Avenue and seek developers to build out parcels that would be created to the east and west of the street. So far, there’s no sign of such a deal, though, for lots of reasons.

The first is that Kmart's lease on the property doesn’t run out for 36 more years. And the payments are a bargain — or, as David Frank, the city’s director of economic policy and development, described it, they are “appropriate for a lease written decades ago.”

Which means that any project that would include a new Kmart store on one of the parcels facing a reopened Nicollet would likely come with rent or financing costs well in excess of what the company pays now. And the company has been more apt to close existing Kmarts and Sears stores than open new ones.

So, why can’t the city at least offer the parts of the property it already owns to a developer for a new project? It could — with Kmart’s permission. That’s because there is another agreement that ties the two properties together: each must approve any new construction that might block views of the other store.

The Kmart shopping center at 30 W. Lake Street.
MinnPost file photo by Tony Nelson
The Kmart shopping center at 30 W. Lake Street.

“They have a lot of control over what happens there anytime between now and 2053,” Frank said.

Still, Frank said the city council has decided the risk of failure is worth it if the city is able to correct what many now consider a massive mistake. The 1970s development, which at the time promised to produce badly needed TIF revenue, came with the demand that the street be closed and parcels on either side be joined to form a superblock.

Now, Frank said, only the city has the ability to undo it. “When we’ve tried to encourage developers to pursue this puzzle in the past, the problem has been that there are too many unknowns,” Frank said. “But without Sears/Kmart’s willing participation, there’s the strong likelihood that the development looks exactly like it does now for quite awhile.”

Darin Broton, a Minneapolis-based public affairs consultant working for Sears-Kmart, agreed, saying there is nothing new to report. “Conversations between all parties have fizzled,” Broton wrote via email. That said, Sears “waits for the city of Minneapolis to develop a workable plan that reopens Nicollet Avenue and ensures Kmart remains a part of the neighborhood.”

The property: Calhoun Square
The location: Lake Street and Fremont Avenue, Uptown

When the Ackerberg Group purchased the Calhoun Square shopping center nearly three years ago, it also got one of this year’s most-intriguing development sites. The half-block parcel at 1301 Lake Street W. that was once a music store but is now currently bare, holding just a pair of storage containers and surrounded by a chain link fence. It’s only productive use is to hold banners directing drivers to a parking ramp behind the square.

But it is smack in the middle of a hot area with a newish apartment building directly across Lake (the one with the hot tub hanging over the sidewalk). A second apartment building is under construction across the street, and another block down Lake sits the future home of a new hotel by Graves Hospitality. 

Empty lot next to the Calhoun Square shopping center
MinnPost photo by Peter Callaghan
Ackerberg CEO Stuart Ackerberg: “We have some thoughts and some dreams for it … There are not a lot of development sites that are available today in the Uptown area.”

In 2014, Twin Cities Business quoted Ackerberg CEO Stuart Ackerberg saying of the vacant lot: “We have some thoughts and some dreams for it … There are not a lot of development sites that are available today in the Uptown area.”

But two years later, no projects appear on the horizon. “To be honest, there’s nothing new to report,” Ackerberg said via email. “I suggest we wait until next year (to talk about the site) at which time, hopefully, there will be a development plan or concept we are considering.”