Kraus-Anderson to expand operations in downtown Minneapolis

Kraus-Anderson, the longtime Twin Cities construction and real estate firm, said Tuesday that it plans to build a new corporate headquarters building in Minneapolis, a move that will double the firm's employee count downtown.

The new, 100,000-square-foot building will be on the southeast corner of 8th Street and 5th Avenue S. and will replace the firm's low-slung headquarters on the same block that dates to the 1970s. That structure, at 525 S. 8th St., will be torn down.

Once the headquarters is built, the firm may further develop the block with residential units or offices, said Mike Korsh, vice president of Kraus-Anderson Realty. "We are looking for development opportunities for the rest of the block, but it has to be market-driven," he said.

The news comes as several new development projects totaling $1.6 billion on the eastern side of downtown have either been announced or are well underway. It's an area of the city that failed to attract wholesale development in the wake of the Metrodome's opening in 1982, but that is quickly changing in the wake of construction of the new $1 billion Vikings stadium, which is slated to open during the summer of 2016.

Last month, Hennepin County Medical Center announced a $191 million, 322,000-square-foot expansion at its downtown Minneapolis campus that will feature new primary and specialty care clinics, as well as outpatient surgery facilities. The proposed facility, not far from the Kraus-Anderson project, will be on S. 8th Street between Park and Chicago Avenues.

And next Tuesday, developer Ryan Cos. will hold a cere­monial groundbreaking for its $400 million Downtown East project, which includes two 18-story office towers for Wells Fargo & Co., 193 apartments, retail and restaurant space, and a nearly two-block public park. The project also calls for a six-level parking ramp that will be owned by the Minnesota Sports Facilities Authority, the public body in charge of the stadium construction.

Construction of the two office towers is already underway, with demolition of the Star Tribune's Freeman Building nearing completion.

At its May 1 meeting, the East Downtown Council voted to support the Kraus-Anderson project. "Their aspirations for the block go beyond their building," said the council's executive director, Dan Collison. "We're pleased they want to consolidate their operations on the site and that they remain committed to downtown. Their current building is not as efficient or attractive or representative of the company they've been in recent years. Their block has been underutilized."

The new headquarters will consolidate employees from the Kraus-Anderson Construction office in Circle Pines, as well as the Kraus-Anderson Realty Co. office in Bloomington. The new digs also will house Kraus-Anderson Mortgage and Kraus-Anderson Capital, as well as the parent company.

All told, the number of employees will double to 250, plus there's room within the building and around it for further expansion.

Kraus-Anderson Insurance, one of the region's largest privately held independent insurance and risk management firms, will continue to operate from its offices in Burnsville.

Korsh said the firm contemplated moving to the suburbs, but opted to stay downtown, where it has been a fixture since 1897. "We are really bullish on the area," he said. The company did not say how much the new building will cost.

"It's the old story of the contractor who's so busy working on everybody else's projects, they don't have time to build their own," said Al Gerhardt, chief operating officer of Kraus-Anderson Construction Co. "Now is the time."

The privately held company has been in a growth mode, hiring more than 100 new employees in the past year, with sales topping $790 million last year.

Recent projects include the 420,000-square-foot Gundersen Health System Legacy Building in La Crosse, Wis.; the 114,000-square-foot Duluth International Airport Terminal; and the Marshall, a 584,000-square-foot, 317-unit student housing/mixed-use project near the University of Minnesota in Minneapolis.

Further, its realty business leases and manages more than 4 million square feet of commercial property and has developed more than 500,000 square feet of commercial properties over the past five years, including medical office, retail, apartments and senior housing properties.

Development activities currently underway include senior housing communities Deephaven Woods in Deephaven and Engel Haus in Albertville. The company also is collaborating on the redevelopment of a 100-acre former State Farm corporate campus in Woodbury, for corporate, retail, medical office building and restaurant tenants.

Kraus-Anderson Capital recently expanded its activities into the booming Williston, N.D., market.

Korsh said the new headquarters is planned to be LEED-certified, and will feature a training center, cafeteria, fitness center, formal and informal meeting areas, and an "appealing, well-landscaped exterior."

Janet Moore • 612-673-7752