After Lockheed Martin announced it would leave Eagan in 2010, its emptying corporate campus near City Hall became a sign of bad times.
Now, with plans advancing to turn the site into one of the Twin Cities’ largest new retail developments in recent years, it’s becoming a sign of Eagan’s resiliency. Already the south metro’s economic powerhouse, the city has weathered massive job losses from Lockheed and Delta Air Lines, and thanks to an influx of smaller new businesses, the city is home to more jobs today than ever.
And that’s before ribbon is cut on the retail and office development on the Lockheed site or a sprawling new outlet mall under construction in the city’s Cedar Grove redevelopment area. Each call for more retail space than such specialty centers as Edina’s Galleria or the West End in St. Louis Park.
The economic boom also includes plans for hundreds of units of high-end apartments at two locations. One proposed apartment project would be part of a complex with offices and a data center.
The developments have the potential to strengthen Eagan’s already healthy tax base. The redevelopment of the Lockheed site alone could boost tax revenue on that property from about $330,000 to $2.5 million a year, according to the developer, Minneapolis-based CSM Corp.
Newcomers to Eagan include Zep Vehicle Care Inc., a producer of auto cleaning products, which recently moved into a facility with offices and a research operation. MISO, which runs the Midwest’s regional electrical grid, is moving from St. Paul into a new 60,000-square-foot building. Tech-support company Stream Global Services relocated its headquarters from suburban Boston late last year.
“You always like to have that really big fish in the bottom of your boat, but it’s OK to catch some sunnies,” said Mayor Mike Maguire. “Those job numbers add up, too.”
Eagan still has nagging concerns, like the 190-acre office campus Delta emptied after it took over Northwest Airlines and moved hundreds of jobs out of the city. A deal to sell it fell through in 2010, and lack of interest prompted the airline to pull it off the market.
A 10-story office building vacated by Blue Cross and Blue Shield of Minnesota in 2011 remains empty and has yet to find anchor tenants. Joe Hoovestol, who works with the investors that bought the building this year, said he has been contacted by people interested in redeveloping it for retail or housing.
The Delta and Blue Cross properties weigh heavily on Eagan’s office market, which like most in the Twin Cities continues to struggle to climb out of the recession. CSM told the city there is little demand for new office space on the Lockheed site or elsewhere in the south metro area. CSM’s proposal includes a 50,000-square-foot medical office building, with a tenant lined up for most of the space.
Not all Eagan’s new jobs are highly skilled, well-paid positions like the ones lost from Delta and Lockheed, acknowledged Jon Hohenstein, community development director. But many are in business and professional services, health and education, not seasonal activity like construction, according to the Minnesota Department of Employment and Economic Development.
The city’s workforce now tops its pre-recession peak, an accomplishment that can’t be claimed by Dakota County as a whole or the seven-county metro area. Eagan hasn’t offered financial incentives to lure employers. “We want to create a good business environment for everybody,” Hohenstein said.
It has some built-in advantages that have helped. The city’s property tax rates are the lowest among cities with more than 30,000 population, according to the League of Minnesota Cities. Its infrastructure includes Access Eagan, a city-owned wholesale fiber network that is open to telecommunications carriers wishing to provide services to city businesses.
Proximity to airport
Eagan also markets its prime location close to Minneapolis-St. Paul Airport, both downtowns and Interstates 35E and 494. Zep’s top executive, Steve Nichols, said the company plotted where its employees lived on a map before choosing its new offices. “We have people all over,” he said. “Eagan was the most central location.”
Hohenstein and Maguire say Eagan has made post-recession progress in jobs and development by being patient and sticking to its long-term game plan.
“If we had been impatient and put a large big-box store or warehouses in Cedar Grove because that’s what we could have gotten during the recession we wouldn’t have had the opportunity to get Paragon,” Maguire said. The outlet mall now being built by Baltimore-based Paragon Outlet Partners will have about 100 stores. About 40 have signed on, with 19 announced last week. The list includes well-known brands like Brooks Brothers, Calphalon, Coach and Polo Ralph Lauren. A Saks Fifth Avenue Off 5th will anchor the complex.
The Paragon development appears to have touched off other developers’ interest in the Cedar Grove area. Next to the mall, work will begin late this year on a 190-unit upscale apartment building, the first to be built in Eagan since the mid-1990s. Hotel developers also are eyeing Cedar Grove.
Area commercial brokers say neither the outlet mall nor the proposed Lockheed development should have difficulty attracting merchants. “Both projects have the scale, the gravity to pull tenants,” said Richard Grones, whose Edina-based Cambridge Commercial Realty specializes in the retail market.
Maguire said he believes the Lockheed project could bring “more urban-flavored” merchants to Eagan. “My wife drives into St. Paul right now to go to Trader Joe’s, and I suspect she’s not the only one,” he said. The development calls for a 38,000-square-foot grocery store, with Trader Joe’s and Whole Foods considered possible tenants.
Dan Gleason, executive director of brokerage services for Cushman & Wakefield/Northmarq, said the retail and housing projects now underway in Eagan could eventually help its office market.
“Maybe that gives you a leg up when folks go out and start looking,” Gleason said. “But first you need people looking, and that’s just not happening to any great degree. We just simply haven’t seen the job growth we need to fill these spaces.”