Space crunch in New Prague

  • Article by: SUSAN FEYDER , Star Tribune
  • Updated: November 12, 2013 - 4:45 PM

The town wants to be prepared in case a sizable prospect comes calling.

New Prague is studying the possibility of acquiring up to 100 acres of vacant land that could be developed into an industrial park, filling an existing gap in the community.

The town’s 31-acre industrial park is full, and there are no large vacant sites that would be ready if an industrial user wanted to expand or move to New Prague, said City Administrator Michael Johnson.

The last sizable chunk of industrial land was acquired last year by Chart Industries Inc. for a major expansion of its manufacturing operations. Chart’s New Prague business makes equipment to store and transport different types of gases, and its growth is being fueled by rising demand for natural gas.

Johnson said the city isn’t talking right now with other potential industrial property users, emphasizing that a decision on whether to acquire and develop the additional land is a ways off.

“City staff has been authorized to develop a game plan for the City Council to consider before we would ever move forward on this type of project,” Johnson said. That information could be ready to present to the council early next year, he said.

Johnson said a number of issues need to be considered, including land prices and financing. There’s also the question of whether having the additional industrial land would make long-term strategic sense, he said.

Having more land available could help the city boost and diversify its tax base. About 70 percent of the tax base is residential, where development is considerably slower than in the mid-2000s, when the city was recording more than 100 housing permits a year. Only five homes were built in New Prague in 2011, the lowest total in more than a decade. Johnson said the city recorded 21 housing permits in 2012 and has 18 so far this year.

A report earlier this year from the commercial real estate firm of Cushman & Wakefield/NorthMarq noted a shrinking supply of industrial land throughout the metro area. “The shortage is prompting developers to stake out the next wave of inventory,” the report said.

Charlie J. Pfeffer, a sales associate with the Maple Grove land brokerage firm Pfeffer Co., agreed that demand for industrial land has picked up. “The inquiries are coming not for speculative space, but from actual users that are bona fide and ready to go,” Pfeffer said.

Johnson said some parcels just outside the city limits on the northwestern edge of town have been identified as possible industrial park sites — one 24-acre parcel and another pair of 40-acre parcels.

New Prague has used a grant from the Scott County Community Development Agency for two market feasibility studies that include estimated acquisition and development costs for some of the land as well possible need based on projected future job growth.

One study by Springsted Inc. estimated the cost to acquire and develop the 24-acre site at $2.73 million to $3.15 million. It said a 2011 appraisal by the city put the value at $1.3 million and added that the landowner currently is asking $1.75 million for the parcel.

The two 40-acre parcels have been listed for sale at $2.875 million, according to the website of Cerron Properties, a commercial real estate brokerage firm.

New Prague’s private workforce of about 2,100 began falling about 10 years ago after peaking around 2,600, according to the Minnesota Department of Employment and Economic Development. But the other market study by Stantec cited research by the Metropolitan Council projecting long-term job growth for the city through 2030.

The Stantec study said the three parcels could provide an excellent location for an industrial park and noted that benefits from the improving economy could spread to exurban communities like New Prague. But the study also said that surrounding communities, too, have large amounts of land available for long-term industrial development.

 

Susan Feyder • 952-746-3282

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