Walgreens developer Semper Development is negotiating to buy the Supervalu site at 30 W. Lake St., according to city officials, with a “much higher offer” than the city could afford to pay.
Semper may form a partnership to build a mixed-use project that includes Walgreens, officials said.
The city has focused on the Supervalu and Kmart sites as part of a longstanding goal to reopen Nicollet Avenue at Lake Street. An appraisal of the Kmart land is still underway.
City officials said brief disappointment at being outbid was replaced by relief that the city doesn’t need to spend money to acquire the land.
“On further reflection, we realize it’s fantastic,” said David Frank, the city’s transit development director. “The private market feels there is value and a return to be made in this location.”
Semper and the landowner did not respond for comment.
Minneapolis city staff still expect to pursue an acquisition of the Kmart property. Frank said several developers are interested in building projects there, but all of them are holding back until they see clarity on the land cost, potential city assistance, and a deal with Kmart — which holds a lease lasting about 40 more years.
Nick Walton, co-founder of CPM Development, said the company is working directly with Semper to finalize a development at Supervalu. CPM is also interested in the Kmart site, he said, but staff are not actively working on the Kmart site until they see where Kmart and the city land in discussions.*
“Overall the entire redevelopment is wonderful for the city of Minneapolis and CPM Development wants very much to be a part of it,” Walton said in an email.
Council Member Elizabeth Glidden (8th Ward) said the city is working to ensure that any new development replacing Supervalu matches the city’s vision.
“Our vision for the site isn’t a single-story development,” she said.
City staff are pushing for concepts with hidden parking, multiple uses on the site (more than a Walgreens store), shared access with the Kmart site, and a structure built out to the street edge.
Council Member Lisa Bender (10th Ward) emphasized that Semper is the early stages of planning.
“There is plenty of time for community engagement and putting together a community vision,” she said.
Bender said that if the city does secure site control of the Kmart land, the city would put out a Request For Proposal (RFP) to solicit development ideas.
At least one other developer, Ross Fefercorn of RMF Group, is also interested in redevelopment at Nicollet & Lake, and he anticipated responding to a city RFP if one was issued.
“I think it’s a compelling opportunity to revisit a major intersection of the Twin Cities area,” he said.
Neighborhood groups have been hoping to make their priorities heard early in the process.
City staff anticipated a broader community engagement effort this year after the city or a “friendly and coordinated developer” has site control.
Thoughts from the neighborhood
“Let’s think big,” said Mark Hinds, executive director of the Lyndale Neighborhood Association. “These opportunities don’t come around very often.”
“There is a lot of interest for development that’s architecturally cutting-edge and out-of-the-box,” said Marian Biehn, executive director of the Whittier Alliance.
Some residents in the Whittier and Lyndale neighborhoods want space for employers that would bring jobs to the area. Nico Products at 2929 1st Ave. S. is cited as an example of a good employer providing living-wage jobs, without an intrusive environmental footprint. (Neighborhood leaders say I-35W’s proposed exit on Lake Street from the north could compromise Nico’s access, however.)
One idea out of Lyndale suggests commercial spaces sold as condominiums, so small businesses could afford to operate there even if property values spike.
Another point of interest in Whittier is somehow preserving the mural behind Kmart, which uses sinister imagery to demonstrate the outrage some felt at the street’s blockage in 1977.
City spokesman Casper Hill said in an email that staff haven’t tackled the mural issue yet.
“We know that the mural is an important consideration, but we have not yet determined how we will handle it. We’ll evaluate it when we reach the site control milestone,” he said.
The neighborhoods are also interested in green space, with park-like areas within the development.
Dave Romm, who lives across the street from the site at the Intown on Lake Condominiums, said it’s been handy to have a grocery store across the street, and he doesn’t mind Kmart’s presence either. He’d love to see a bus station (like the one at Lake and Chicago) that’s connected to the proposed Lake Street I-35W transit station, or perhaps connected to future transit running along the Greenway. He envisions retail built into the banks over the Midtown Greenway, a pedestrian walkway (or even skyway) crossing Lake, and a good restaurant on the site that extends the Eat Street line of restaurants.
Some residents in Whittier worry about whether Nicollet’s reopening might drive up rents for the small, diverse restaurants and markets that line Eat Street.
“Ironically, closing Nicollet forced or became the inspiration for Eat Street,” said Biehn. She explained that when Nicollet closed at Lake, land values became depressed and several venues went out of business. But that in turn opened up affordable opportunities for new small businesses to open.
One idea that came out of brainstorming sessions in Whittier is a “business conservation district” that would keep rents affordable and encourage more small businesses to thrive on Nicollet. Other residents have suggested higher-priced residential units to subsidize ground-floor commercial space offered at affordable rents.
Ethan Kent, senior vice president of the New York-based Project for Public Spaces, said he hasn’t come across a similar “business conservation district” before, although he’s seen other strategies like pop-up shops, grants, loans and resource pools. He said gentrifying neighborhoods tend to see more shops survive when change is defined by existing businesses.
“When change is too development-led and too design-led, it is more likely to lead to negative [gentrification],” he said.
The potential for several years of construction looms for residents.
The I-35W Transit/Access project is slated for construction in 2017, which involves a new southbound exit ramp from I-35W to Lake, a new northbound exit ramp from I-35W to 28th Street, a two-level Bus Rapid Transit station at Lake Street, and new bridges at 31st Street, Lake Street, the Midtown Greenway and 28th Street.
Streetcars are another long-term possibility along Nicollet, with an environmental assessment expected to become available for public review in early 2015.
“That area could also be under construction for 10 years,” Biehn said.
City staff said they are coordinating with both projects, but for now the project timelines are independent.
Hinds said he hopes for top-tier developers with ample financial resources. He said his biggest fear is that a developer would fail to execute plans.
“We don’t want a vacant lot for 10 years sitting there,” he said.
Thoughts from developers
CPM Development is the company behind 1800 Lake and several other apartment buildings near the University of Minnesota. Walton said he’d like to build market-rate rental at Nicollet & Lake, but it could be difficult.
“It has its challenges because the current rent comps don’t support the price for new market rate construction costs,” he said.
Fefercorn built the Track 29 apartments on the Greenway and Uptown Row at Lake & Emerson.
Aside from the grocery and Kmart lots, Fefercorn sees development opportunities stretching north and south on Nicollet and the surrounding blocks. He envisions workforce and market-rate rental. Small service-based offices could also work in two stories or more, he said, if parking is free, inexpensive or convenient. He likes the model of a two-story Target store he’s seen in Albuquerque with parking installed underneath the store (an option for Kmart). He thinks mid-rise development of four-six stories would be most feasible.
Fefercorn is also interested in highlighting the Nicollet Avenue bridge over the Greenway.
“The character of the site and community would be enhanced if the bridge were reconstructed to include architectural features, lighting, wide pedestrian sidewalks and bike lanes,” he said in an email.
A parking strategy is an important consideration for Fefercorn. He praised the free parking at 50th & France and The Shops at West End in St. Louis Park. He said hidden parking would help create charm, unlike, say, the parking ramps at the Mall of America. He suggested public subsidies to help defray the cost of public parking.
Fefercorn said redevelopment would take several years. He said there needs to be a deal in hand with Kmart and the property owners, an achievable financial plan, a new master plan for the area, and a new bridge in addition to the development of vacant land.
“These are very heavy boulders to pick up and move. These are long processes,” he said.
*CPM’s role is updated from an earlier post.