Kelly Doran's third big project near U kicks off

Developer Kelly Doran, whose firm just opened its second 100-plus-unit residential building near the University of Minnesota's Dinkytown area, is heading to Stadium Village for his next campus housing deal.

Doran closed this week on the purchase of the long-shuttered Oak Street Cinema and an adjacent restaurant on the southeast end of the intersection of Oak Street and Washington Avenue SE. for an unspecified price.

He plans to break ground later this month on "309 Oak," which will be a six-story, 65-unit apartment building, including underground parking. It's the third and smallest of his on-campus residential/retail projects since 2009, when he launched the recession-delayed $36 million renovation of the iconic "Minnesota Dinkydome" office/retail complex in Dinkytown and the adjacent Sydney Hall with its 141 apartment units.

Last week, Doran, 53, a veteran banker and commercial developer who started his own company in 2007, opened "412 Lofts," a 102-unit building at 4th Street and 12th Avenue SE. in the wake of the fully rented Sydney Hall.

Doran, who had to put down nearly 25 percent on the Sydney Hall/Dinkydome project to get money out of recession-spooked bankers two years ago, said the real estate business is improving, but the market is still absorbing office and retail space that was financed during the 2003-07 boom years.

"Before the recession, we might not have envisioned building and owning student housing," Doran said in an interview this week. "But when things change in the economy, you better be flexible or you might not be around long."

The recession drove the titanic likes of Opus Corp. into bankruptcy, stiffing lenders and contractors around the country. The slowdown has idled 25 percent or more of the building trades workers in Minnesota. The industry went from building skyscrapers, tract housing and shopping centers to residential rental units -- but only where there was proven demand.

Rents at the 412 Lofts go from $1,000 for a one-bedroom to $2,000 for a spacious two-bedroom, two-bath unit, but which has room for four occupants.

Doran added a tasteful peace garden at the corner of Fourth Street and 12th Avenue SE. in memory of his sister, Jean Doran Kraus, a University of Minnesota-trained horticulturalist who died of cancer last year at age 57. The garden features a sculpture of Kraus by Minneapolis sculptor Nick Legeros.

"She was a Washburn High grad," recalled Doran, a Southwest High grad. "And always a Minneapolis girl at heart."

Doran also has acquired and renovated a couple of small commercial centers in mature suburbs over the last four years.

Doran's return to the U campus is a homecoming of sorts. Raised by a single mom and the youngest of four kids, Doran spent seven years working part-time jobs to finance a B.S. and MBA from the U's Carlson School of Management. He spent nine years as a commercial lender with Bank of America and nearly 15 with huge developer Robert Muir Cos. The life-long, centrist Democrat left in 2006 to make an unsuccessful run for governor.

Doran Cos. designs, develops and manages projects. It subcontracts most construction.

Doran isn't straying too far from Minneapolis lately. His Bloomington-based company with 25 employees has acquired three acres of land that once were part of the Pillsbury A Mill complex on the Mississippi River, east of St. Anthony Main.

He hopes to break ground next spring on two seven-story buildings that will house 375 apartments, built around the flour mill's historic structures.

Neal St. Anthony • 612-673-7144