With demand for new bulk warehouse distribution space soaring well beyond the available supply in the Twin Cities, the Opus Group — which has been busy building luxury apartments in downtown Minneapolis — is returning to its bread and butter in Shakopee.
Opus has mostly been in the news for its residential projects such as the Nic on Fifth high-rise apartment building, scheduled to open in August, and Velo, a 101-unit mixed-use building in the North Loop, which will begin accepting tenants in May.
With those and other high-profile residential projects, the developer is addressing the robust demand for urban living units. But it's also seeking to satisfy another lucrative, if decidedly less sexy, commercial real estate segment.
Its Opus Development Co. subsidiary this month is putting the finishing touches on a speculative, 200,000-square-foot industrial warehouse in the southwest suburb of Shakopee, the first of a planned four buildings on a 50-acre parcel that was once part of the never-completed ADC Telecommunications campus.
It's a kind of hearkening back to Opus' roots as an industrial and office developer after an extended dormant period for such projects due to the recession, Opus Development Senior Director Tony Phelps said.
"We have done over 120 million square feet of industrial space since our inception in 1953," he said. "That's traditionally been our bread and butter as a company, and industrial has made a strong comeback."
While Opus has continued to work on major warehouse projects in Midwestern transport hubs such as Indianapolis and Chicago, its effort in Shakopee marks a return to that type of project in the Twin Cities.
The company acquired both the former headquarters of the failed technology company and the land surrounding it in 2012, then sold off the existing building, where Emerson Process Management of Rosemount will spend up to $70 million in upgrades as part of a major business expansion in Minnesota.
Meanwhile, Opus retained the adjacent vacant land and is capitalizing on the resurgence of the industrial market to create the Valley Park Business Center.
The spec distribution building, scheduled to open next month, will be leasable at $4.75 per square foot and has much-sought-after 32-foot clear ceiling heights, as well as 37 dock doors and a 130-foot-deep truck court.
Phelps said Opus was comfortable going ahead without takers lined up ahead of time because Shakopee is generally lacking the kind of modern distribution space that companies are looking for.
"The ultimate goal is to find one large user to fill the building," he said. "There's a very limited amount of large, contiguous blocks of space with 32-foot clear height out here," he said.
Handling the leasing for the project are Ryan Krzmarzick and Eric Rossbach of Colliers International.
Krzmarzick said the industrial market is so hot that new space is being snapped almost as soon as it can be built.
"For instance, in Rogers, Liberty Property Trust announced a pair of 227,000-square-foot spec buildings with 32-foot clear heights," he said. "The first one was completed about a year-and-a-half ago and has just 45,000 square feet left, while the second one is under construction and is fully leased to Graco Inc."
Interstate Partners also has found success with new warehouses in Eagan and South St. Paul, Krzmarzick said, while a new building from Trammell Crow and the Artis REIT in Roseville has already been 100 percent leased by St. Jude Medical Inc., whose headquarters is in nearby Little Canada.
"For the Valley Park Business Center, we're looking at possible tenants who may already be taking advantage of tall clear heights in multiple locations but who want to consolidate their operations under one roof in a single, contiguous space," Krzmarzick said. "That's what St. Jude did in Roseville."
Don Jacobson is a St. Paul-based freelance writer and former editor of the Minnesota Real Estate Journal. He has covered Twin Cities commercial real estate for a decade.