City of no industry

A housing boom gobbles up industrial land, and the Midtown Greenway is one morsel. But is Minneapolis squandering manufacturing jobs?

Midwest Machinery, 2848 Pleasant Ave., is the latest poster child for a major city trend — industrial land going residential.

The Edina-based Cornerstone Group has a purchase agreement to buy the old industrial building and plans to sink millions of dollars into a housing development there. If it goes through, the assessed value of just two of the new housing units abutting the Midtown Greenway would surpass the industrial building’s current market value.

Go six blocks west, and the long-awaited Urban Village housing development is rising out of the land once occupied by Sowles Crane Co., 2813 Bryant Ave. S.

Mike Christenson, director of strategic partnerships for the city’s Community Planning and Economic Development Department, says the pressure on the city to move housing into industrial lands is increasing, noting that Minneapolis has $2.8 billion in housing projects underway.

The housing boom is resonating, but will industry become just an echo?

No one at the city knows.

City staff and policy makers have raised questions in recent years about the loss of industrial land. However, such broad planning has languished as staff focuses on new development applications amid budget cuts.

Some city leaders, such as City Councilmember Gary Schiff (9th Ward), say Minneapolis needs an industrial land-use policy that takes jobs into account.

"We know where we want to build the housing; we don’t know where we want to build the jobs," Schiff said.

Barb Sporlein, the city’s new planning director, said her work plan includes developing a city industrial land-use policy.

"Since I started, I have heard the perception that industrial users are being chased out," she said. "We have little ready-to-go industrial land available … I don’t know what the real story is, and we want to get it."

Not everyone laments lost industrial land.

Several developers say industry has left not just Minneapolis, but Minnesota and the nation — so the city should move on. Some of the old industrial buildings are out-of-date and underused, and the new developments are a vast improvement, they say.

Slowly but surely

Look at a city zoning map and it is clear South Minneapolis has almost no industrial land.

What little land there is lies along the 29th Street Midtown Greenway (a future transit corridor), Hiawatha Avenue (home to light-rail transit) and a small chunk in the Windom neighborhood near Lyndale Avenue South and the Crosstown Highway.

Hiawatha Avenue and the greenway are prime candidates for new residential development, said Tom Reynolds, executive director of the Whittier Community Development Corp. Reynolds’ group has a business incubator on the greenway.

One by one, companies are leaving.

Midwest Machinery is one industry giving way. The 50-year-old company buys, repairs and sells used equipment — lathes, boring machines and gear deburrers.

The building was once a railroad foundry, the selling agent said. Built in 1916, 2848 Pleasant has a $440,000 market value, according to the Hennepin County Web site.

Cornerstone initially planned to spend millions of dollars to renovate the building into the 58-unit Machinery Lofts. A company representative now says the economics don’t work. Plan B? Tear down the building and build 129 condos selling for between $190,000 to $250,000 each.

If units sold for an average of $220,000, the project’s total assessed value would be about $28 million — or 20 times more than Midwest Machinery’s.

Reynolds said if Midwest Machinery moves, the last two industrial uses on the greenway between Nicollet and Lyndale avenues would be King’s Deluxe Foods (formerly GFI), 2815 Blaisdell Ave. S., and the Whittier CDC incubator, 2845 Harriet Ave. S.

The Cornerstone proposal may fail. The neighborhood group opposes such high-density housing. Other greenway proposals have faltered, such as Sherman Associates Nicollet-Lake Commons development. That idea tanked when city plans to reopen Nicollet Avenue at Lake Street hit the skids.

Still, the fact that such proposals are on the table points to changes coming in fits and starts. The three-block Urban Village project in the Wedge has had its share of delays, but it is now moving ahead.

The Whittier CDC and Basim Sabri are pursuing a project on the greenway’s south side, between Pillsbury and Pleasant, Reynolds said. Initially planned as an industrial development, 60 units of housing is now an add-on.

The site plan awaits Planning Commission approval, he said.

Reynolds predicted by 2015, the greenway — from Lake Calhoun to the Mississippi River — would all be housing.

South Minneapolis is the tip of the iceberg. In North Minneapolis, a master plan envisions housing and parks replacing west-riverbank industry.

Downtown is the hottest area for industrial conversations, from the 30-unit 918 Lofts in the old Flo-Pac building, 918 N. 3rd St. to a 1,095-condo project slated in and around the old Pillsbury "A" Mill near St. Anthony Main.

The city does not allow housing on industrially zoned land, but has created "Industrial Living Overlay Districts" on about 500 of its 4,500 industrially zoned acres, say city zoning officials.

The so-called ILODs are mostly in downtown, although one is around the Chicago/Lake intersection.

The Portland model

Schiff, chair of the Council’s Zoning and Planning Committee, said he is itching to tackle the industrial land-use issue.

"The city does have a goal of increasing employment," he said. "It doesn’t necessarily have to be in conflict with increasing our residential population — if we know where we want to increase those jobs and where we want to build the housing."

He said Minneapolis should follow Portland, Ore.’s example. It needs to inventory current industrial businesses and their job base and do a market analysis to understand Minneapolis’ strongest niches.

One area of regional advantage is industrial baking, he said.

"A great example is the New French Bakery in Seward. They started with five employees a decade ago, now they have expanded, and they have over 100 employees," he said.

Schiff estimated the industrial study would cost approximately $300,000 and take four months. "We can’t begin to start to make some of these [land-use] choices until we have a plan," he said. The choices "just show up as individual conflicts between neighbor and neighbor."

Michael McLaughlin, who heads the Greater Northside Business Association and other neighborhood business associations, said he has heard for at least three years that the city wants to create an industrial land use policy.

It has not materialized — and it is detrimental to places such as the Bassett Creek Valley near Bryn Mawr, he said. A new neighborhood master plan called for replacing established industries with housing.

"There is a case here where some of the neighborhood folks and the neighborhood organizations are leading that charge to convert that industrial use to residential use — getting ahead of the market," McLaughlin said. "That is definitely where we have seen conflicts."

Conflicts coming?

Some industrial property owners worry about the encroaching residential developments and future conflicts that could arise.

Southwest will have different issues.

Residents living near the city’s industrial land worry about what makes their neighborhood livable, and in some cases don’t want change.

Jose Chavira has lived on the 2800 block of Bryant since 1986 and characterized Sowles Crane as a good, considerate neighbor. He and others said they worried about the increased traffic Urban Village housing will bring.

The two-phase development will add 192 housing units between Aldrich and Dupont avenues, north of the greenway.

Reynolds said the land-use changes will create more pressure to improve transit systems.

Blue-collar workers who live in the city will have to get to blue-collar jobs in the suburbs, while white-collar workers living in the suburbs need to get to downtown jobs, he said.

"The city has taken the focus that this is supposed to become a professional, service-oriented community," he said.

Urban Village neighbor Kat Gordon said she is worried about gentrification.

"I think it is God-awfully horrible," said Gordon, a renter. "It is overpriced housing."

Elizabeth Maxeiner lives across the street from Midwest Machinery and says she sees the potential downside to a new housing development and the added traffic, yet she thinks it is a good idea.

Midwest Machinery is not a noisy neighbor, she said. But the area gets quiet at night and doesn’t feel safe.

"The greenway will be safer when there is more traffic," she said.

Market forces working

Sherman Malkerson has bought and sold North Loop industrial properties for decades, and said Minneapolis — like the rest of the country — has lost a lot of industrial jobs, and it isn’t all bad.

"We have gone beyond that," he said. "That kind of stuff is taking place in Taiwan. I don’t think that manufacturing drives the city of Minneapolis economy anymore — and I don’t think it is necessary that it does."

City Zoning Administrator Blake Graham said Minneapolis still has core industrial areas in Northeast Minneapolis and the University Research Park.

The market forces converting downtown industrial land does not mean the city is losing good, high-paying, blue-collar jobs, he said.

"I don’t know that we are really degrading our industrial capacity to a great extent," Graham said. "I am not certain we are going to displace viable industrial land uses that weren’t going away anyway."