All eyes are on riverfront projects in effort to refresh downtown St. Paul

Star Tribune

By Nicole Norfleet Star Tribune FEBRUARY 8, 2020 — 7:25PM

St. Paul could see transformative developments, though barriers remain.

The skyline of downtown St. Paul, left relatively unaltered for more than 30 years, could see some flashy additions — if developers and public officials can navigate some significant hurdles.

Downtown St. Paul, long a development afterthought compared with its glitzier neighbor Minneapolis, has a slate of possible statement-making projects on its horizon, including ambitious proposals for the redevelopment of the RiverCentre parking ramp and the construction of the Riversedge project at the former jail site on top of the bluffs.

The new developments would bring a substantial amount of construction to a city that hasn’t seen a downtown project of this scale in years and has struggled to fill some of its aging office towers.

“I think downtown St. Paul is really on the cusp of a renaissance,” said St. Paul Council Member Rebecca Noecker, whose ward includes the downtown business district.

While developers have floated grand ideas, the projects face considerable hurdles of financing, finding commercial tenants and convincing residents that the Capital City can go big with development.

“The biggest challenge is getting the community over the hump that this is too big for St. Paul or too grand for St. Paul. ... The market is really there. I think it’s more just getting the community at large to buy into it,” said Brian Dusek, managing principal of real estate development in the central region for Los Angeles-based developer AECOM, the developer behind the ambitious Riversedge project.

Most of the tallest buildings in St. Paul were built in the 1980s, and several of downtown’s older office buildings have been converted into apartments as the total number of people living in downtown St. Paul has more than doubled from 4,862 in 2010 to 9,845 in August of 2019.

In recent years, new construction in downtown St. Paul has been dominated by apartment developments such as the Irvine Exchange apartments that opened last summer and hotels like the SpringHill Suites by Marriott scheduled to open this spring on Jackson Street close to 7th Street.

Looking to change that, Ramsey County officials have selected AECOM’s proposal to build the $788 million Riversedge project on the Mississippi River, once home to West Publishing’s headquarters.

The project would involve the construction of three towers that could include a 170-room hotel, 350 apartments and close to 60 luxury condos, 30,000 square feet of retail, and 650,000 square feet of high-end office space as well as a terraced, public promenade to connect downtown to the river. A final fourth tower could be all offices or a mix of uses.

The project is in its design, permitting and financing phase, with community input meetings likely to start this spring. Currently, AECOM leaders are surveying the land, negotiating with railroad authorities to obtain an easement for the county to build the concrete land-bridge, and connecting with investors. AECOM has also asked for an $80 million contribution from the county, half of which the county has requested in state bonding funds to help with the public realm portion of the development.

Gov. Tim Walz last month declined to include the project as part of his $2 billion state bonding package; county staff are meeting with legislators to garner support for the project, said Josh Olson, deputy director of community and economic development for Ramsey County and the project manager for the Riversedge development. “We are still seeking that funding,” he said. “We know we have some work to do there.”

Design tweaks will also likely be made as AECOM and the county prepare to conduct community meetings and speak to neighborhood groups in the coming months and discuss aspects of the project including the publicly funded space that would function as an urban park. Dusek hopes the project would break ground in the fall.

“It was such a grand vision when we came out with it that there was a lot of … ‘Gosh, we have never done this before,’ which is kind of a Minnesota thing,” Dusek said. “ ‘We’ve never done it before, therefore it can’t be done.’ But the reality is this kind of project, and even [those] far grander than this, has been done in many places around the world, and it can be done.”

Who will occupy the buildings is another significant issue for the project. While the Riversedge includes plans for hundreds of thousands of square feet of class A, high-grade office space, which St. Paul currently has a dearth of, the Greater St. Paul Building Owners and Managers Association (BOMA) reports that vacancy rates for competitive office space (which is not owner-occupied or used by the government) in downtown remain high at more than 21%, several percentage points higher than the overall office vacancy of the entire Twin Cities.

For the office space at Riversedge, AECOM is courting anchor tenants as the company works to get leasing commitments for 40 to 50% of the office space before construction.

Noecker said the city has a big need for class A office space. “If you build it, they will come if it’s great space,” she said.

Another project that could dramatically alter the city is the redevelopment of the RiverCentre parking ramp across Kellogg Boulevard from the RiverCentre Convention Center and the Xcel Energy Center.

In December, the city received six proposals for development ideas for the air rights above and land next to the ramp, which could be preserved or rebuilt.

The project is in its first phase of the evaluation process, which includes meetings with each developer and staff from the RiverCentre Convention and Visitors Authority and staff from the city’s Housing and Redevelopment Authority. HRA staff members have not recommended a tentative developer yet but aim to make a decision this spring.

Reuter Walton Development wants to build about 200 apartments lining the revamped ramp, similar to what it has done at the parking ramp near the former Thrivent offices in downtown Minneapolis.

The final stage of the development could be a hotel, office or more housing.

“There seems to be a stronger interest in St. Paul right now, and coming with it is creative projects,” said Nick Walton, co-founder of Reuter Walton Cos., which includes Reuter Walton Development.

The riverfront real estate is another reason developers are being creative with their proposals, he said.

Developer Sherman Associates wants to build a 250-unit apartment building along with a hotel at the site and connect to the city’s planned River Balcony to provide a “marquee” development in St. Paul, said George Sherman, chief executive of Sherman Associates, in an interview.

Mille Lacs Corporate Ventures, which already owns two major St. Paul hotels, envisions a 500-room hotel, a dine-in movie theater, a “game-and-gather venue,” office space and condos in its sleek design.

The St. Paul Port Authority’s Capital City Properties wants to build a 300-room hotel in collaboration with the Prairie Island Indian Community, which operates Treasure Island Resort & Casino. The project would include 125 apartments.

Indianapolis-based Flaherty & Collins Properties, which according to Finance & Commerce wants to build apartments and a hotel, and Denver-based Swerdling and Associates have proposals, but they didn’t respond to the Star Tribune’s requests for comment.

The focus on the Riversedge and RiverCentre reflects changing sentiment over the value of the urban riverfront. It’s something that George Sherman has seen firsthand in neighboring Minneapolis.

“People first said in Minneapolis the joke, ‘Who would want to live on the river?’ ” Sherman recalled from his early days of pursuing projects near the river. “Now everybody does.”