DULUTH — In an area where outside investment is often needed for large-scale developments, Scott Moe, senior vice president of Minneapolis-based Launch Properties, sees an opportunity that others developers aren’t taking.
The company is poised to build a 98-unit apartment complex overlooking Lake Superior — recently approved by the planning commission — and has a growing list of other plans for the city.
“Right now there isn’t anybody really aggressively pursuing business in Duluth, and we’re kind of hoping to fill that void,” Moe said. “The challenge is just to get the numbers to make sense. It’s always right on the cusp.”
The area’s tough topography ranging from hard bedrock to wetlands makes development expensive, Moe said. Higher wages due to strong local unions also increases costs, he added.
“People think when you work outstate it’s cheaper, but (Duluth) is actually more expensive than the Twin Cities,” Moe said. “It’s why you haven’t seen as much development here as you think there would be.”
The new apartment complex, which Moe is calling Launch Lake Apartments, is expected to cost up to $30 million and will be “basically a smaller version of Endi,” the residential and retail building next door that opened in 2017 on London Road and 21st Avenue East, he said. That project also came from Twin Cities developers.
Duluth faces a housing shortage at all income levels, though like Endi, Launch Lake Apartments won’t include units affordable for low-income renters.
“It will have ‘micro units’ with nice amenities,” suitable for single professionals or retirees, Moe said. “They go like hot cakes down here in the Twin Cities, and we’re hoping that will translate to Duluth, too.”
The average rent in Duluth has risen to about $1,100, according to a city housing report issued this summer — a 63% increase over the past decade. That’s too high for about half the population, the report says.
Launch Lake Apartments, which is expected to break ground next spring, is one of the first ventures into housing for Launch, a company which generally focuses on commercial and industrial development. Founded in 2011, the firm touts its knack for “acquiring and improving properties with unrecognized potential.”
In Duluth, that has often meant properties with houses on them. The apartment complex will require the demolition of three homes; a planned retail development near the Miller Hill Mall would knock down at least two; and the company’s first project in Duluth — storefronts now home to a Starbucks and Aspen Dental near the mall — displaced one.
Launch is looking at other multifamily housing opportunities in Duluth as employers in the area, especially at the airport, are “desperate for housing,” Moe said the city told him.
Other projects Launch is lining up include:
Where: The corner of Anderson Road and Central Entrance near Miller Hill Mall
What: A $8-$10 million multiphase retail development named for the awkward shape of the land it sits on. A few tenants have been lined up, but building has been delayed by “difficulties” at the site and a change in plans. “About the time we get settled another prospect comes along that screws the project up — in a good way,” Moe said. Launch owns the land and has had one proposal OK’d by the city but will be bringing an updated plan this winter.
When it could happen: Moe said he hopes to start building in the spring.
Atlas Industrial Park
Where: 2500 Block of Commonwealth Avenue in the far western part of town.
What: A proposed warehouse on a slow-to-redevelop site once home to major Duluth employer Atlas Cement. It’s city-owned land; Launch is trying to lure a tenant to justify the cost of building the warehouse.
When it could happen: It will likely take a tenant to sign on before this is built.
Regional corporate office/housing
Where: Sundby Road north of Kohl’s
What: Bank-owned property has been eyed as a possible site for an office for an unnamed corporate client that could bring several hundred jobs, Moe said, but that decision is still “moving up the corporate ladder.” He also wants to bring multifamily housing to the site.
When it could happen: Unknown. “To use a football analogy, we’re on our own 10-yard-line with that,” Moe said.