The Free Press, Mankato, MN

February 19, 2013

Local building in 2012 yields a mixed bag

By Tim Krohn
Free Press Staff Writer

— Those in the home and apartment construction trade had a good increase in business locally last year. But those who specialize in building large industrial and commercial buildings were sitting on their hands.

A look at 2012 building permit reports locally shows mixed results. Construction of new homes and apartments in Mankato shot up 51 percent last year compared to 2011. They were up 68 percent in North Mankato.

But new construction of industrial or commercial buildings stalled, falling 46 percent in Mankato and down 96 percent in North Mankato.    

Slow business construction was attributed to a variety of things: uncertainty over the presidential and congressional elections, uncertainty about whether Obamacare would be the law of the land, fears of European economic disasters, and a slowdown in U.S. manufacturing the last half of 2012.

Mankato City Manager Pat Hentges said that while commercial development may have been lackluster last year, he thinks it will grow significantly this summer as the city has seen strong interest from developers in recent months.  

“Last year was the year of the apartment, restaurant and strip center,” said Hentges of the areas that saw growth.

“I would hope this year is the year of Wal-Mart and industrial growth. And all indications are that we’re seeing an uptick.”

The reference to Wal-Mart is the long-anticipated announcement by the company that it will begin construction on a massive distribution center on land it has owned for several years on the east side of Mankato.

The project would bring investments of hundreds of millions of dollars, numerous construction jobs for years, hundreds of permanent jobs and a variety of spin-off development.

Hentges said there is already increased interest in land around the distribution center site and more interest in land in general.

“I haven’t seen the amount of interest in industrial investment before that I’ve seen this past year. The economy is rebounding and the workforce development is there,” he said.

“And there’s strip centers, remodels and restaurants coming in as well.”

There is a also a major proposal working through the system that would bring major office, retail and apartment developments to a block of south Front Street.

Mike Fischer, interim city administrator in North Mankato, said they, too, are expecting this year to be better on the commercial-industrial side.

“We’ve seen more interest in the industrial-use side during the last half of 2012. We’ve got a couple of projects we believe may occur in 2013.”

As for residential construction, both cities expect to see continued steady growth, although no big surges.

“For (single-family) housing starts, we’ll stay stable in that 100 range, but I don’t think we’re going to get back to that 200 range for a while,” said Hentges of the number of annual new home starts that peaked prior to the recession.

One thing both communities have are plenty of available lots in subdivisions that were started but then stalled.

“We have a good supply of lots available in all categories. Upper end, middle and starter,” Fischer said.

Apartment construction will continue to lead in residential construction. It’s likely a major upper-end apartment and commercial development project will start in Mankato on land behind Madison East Center.

In North Mankato, a redesigned $10 million  Marigold apartment complex is moving through the process of approval.


St. Peter: apartments, Shopko

St. Peter Community Development Director Russ Wille said they, too, saw little industrial/commercial activity last year but have high hopes centered around a proposed Shopko development this summer and a number of residential projects.

Single-family construction increased modestly last year from six in 2010 to nine in 2012.

 Apartment construction, however, is booming.

Drummer Construction is building 38 apartment units and has purchased four adjacent acres for more. The project, on the north end, will complete the Apple Tree Village project, which other developers started in 2003 before dissolving their partnership.

Wille said a recent housing survey showed St. Peter had a less than 1 percent apartment vacancy.

The city also is working with the Southwest Minnesota Housing Partnership to bring 40 units of housing to the former hospital site downtown. The hospital and a nursing home were razed a few years ago when a new hospital was built on the edge of town.

The apartments would be built by a developer under a tax-credit program that gives the developer financial incentives in exchange for having a cap on rent on a certain number of units.

And officials are hoping a Shopko project will happen this summer on a four-acre site near Hallet’s Pond. Wille said there is a total of 15 acres of land there and he believes the Shopko project will trigger other developments such as restaurants.