More than $3 million in public assistance has helped to lure the Opus Group and Inland Development Partners to build an office warehouse on a former dump site the city of Maple Grove has owned since 2005.
Minnetonka-based Opus and Wayzata-based Inland have proposed a 204,000-square-foot speculative warehouse project on a 13-acre site at 8550 Zachary Lane N. The property, which is in the northwest quadrant of Highway 169 and Interstate 94, is next to the city’s burgeoning Arbor Lakes redevelopment area.
The Maple Grove Planning Commission is scheduled to consider the proposal at an Oct. 8 meeting. The developers have signed a preliminary development agreement with the city. The estimated $23.5 million project would be built on a site the city purchased 13 years ago for $1.88 million. Maple Grove has secured $1.75 million in cleanup grants from the state, Hennepin County and the Metropolitan Council. The city is also considering awarding $1.4 million in tax increment financing to the developers “because of extraordinary site costs,” said Maple Grove City Administrator Heidi Nelson. The money would go to defray project costs.
The site is hardly ideal. The city bought the property knowing it was contaminated. Waste on the site is primarily construction debris, Nelson said. But the sheer amount of waste on the site turned out to be more than the city anticipated.
“As the development process unfolded, the city discovered more extensive contamination and sought grant funding,” said Jason Aarsvold, a senior municipal adviser with the Minnesota office of Ehlers, in an email to Finance & Commerce. The city is using Ehlers as a consultant in the redevelopment effort.
The expense of removing the waste has made the site difficult to get redeveloped, Maple Grove’s Nelson said. “It’s been hanging around for a long time,” she said in an interview. “This has been a long-term project.” The city does not have a specific job creation goal for the project, she said.
The proposal from Opus and Inland came in response to a request for proposals the city issued in April 2016. The developers initially submitted separate proposals, but decided this year to develop the property jointly, Aarsvold said.
Construction will start by the end of 2018 and will wrap up in the fourth quarter of 2019, said Inland Principal Tom Shaver. The new building will be marketed to multiple tenants. The city is requiring that about 30 percent of the total space be used for offices.
The site is right for an office-heavy industrial project due to its proximity to retail and services at Arbor Lakes, Shaver said in an interview. “It’s a gateway site for the city of Maple Grove,” Shaver said. The structure would be built near 2 million square feet of industrial space Duke Realty plans to build at 10801 77th Ave. N. and 7560 Zachary Lane N. The city approved Duke’s plan earlier this year.
The Opus-Inland project would go into a submarket with an industrial vacancy rate of 7.5 percent, which is the highest in the Twin Cities, according to CBRE’s latest Market View report. The overall Twin Cities industrial vacancy rate is 4.4 percent.