Chris Grzybowski, a partner in the local office of Utah-based Big-D Construction, is kind of a proxy for the Twin Cities building boom that in Minneapolis alone is heading for a record four years in a row of $1 billion-plus in commercial-residential building permits issued.
"We've been fortunate," said Grzybowski, 51, a Wisconsin native who moved to Minnesota with his family in 2013. "We've got about $180 million worth of projects done or underway this year.
"It's been mostly multifamily; also public works projects; a bank building, a restaurant. We're diverse. We also have put some projects on Big-D's portfolios in Colorado, Washington and Utah through relationships here. The owner of Big-D is pretty happy with our performance."
Yet Grzybowski and other veteran contractors also believe the pace of development, at least in downtown Minneapolis and at the University of Minnesota, will slow over the next year or so. Minneapolis topped a record $2 billion in construction permits pulled in 2014. About a quarter of that was a big chunk of Vikings stadium construction and related private developments in Downtown East, the last undeveloped downtown tract.
Minneapolis crossed $1 billion for 2015 in September, again thanks to about $120 million in construction permits pulled for the Wells Fargo office buildings that are nearly complete in Downtown East and the nearby Portland Towers condominiums on Seventh Street, according to city records. But this year should fall short of last year in terms of volume in the city, particularly downtown. And things may be cooling in the several years-hot loop that has witnessed its biggest boom ever since 2010.
"Potentially there will be some pain for developers," said Kelly Doran, CEO of Doran Cos. and a developer-builder in the Twin Cities for 30-plus years.
Doran, who has been engaged in at least $100 million in projects for several years, in 2009 broke ground on upscale student housing on the U's East Bank campus, and apartments for professionals and retirees downtown and near St. Anthony Main.
"We're still doing projects downtown [as a contractor], but I don't understand how all the planned downtown [residential] projects are going to work," said Doran, who built hundreds of downtown-area apartment units that rent from $1,200 to $8,000 a month for a penthouse.
He's lately shifted his focus to multifamily housing in Maple Grove and other suburbs.
Some empty-nester baby boomers are selling houses into a solid market and choosing to stay and rent in their home communities.
Doran, the first developer in town to get financed and start building private projects in late 2009, said: "Wall Street looks at real estate as a commodity but it's not. It's a local game. You can have areas where its overbuilt in one neighborhood … and the U of M is now overbuilt.
"And almost all our campus buildings are at least 95 percent leased. The debate is whether these [neighborhoods] can take anything more."
Builders such as Doran and Big-D are swinging to the suburbs and parts of Minneapolis and St. Paul with market-rate housing.
The part of the market that still lags is affordable housing for workers whose wages haven't grown for a decade.
CEO Alan Arthur of nonprofit developer Aeon and a variety of partners have spent about a decade on a $50 million overhaul of the once-blighted intersection of Portland and Franklin avenues in south Minneapolis with 250 housing units in four buildings that bear market rents for families of up to $1,600 per month but also affordable efficiencies and one-bedrooms for folks making $12 an hour. The development includes retail, child care and office space.
However, affordable housing often takes years to develop through a patchwork of financiers, including banks, foundations, government and tax credits for affluent investors who participate. A few of these deals are now coming to fruition but not enough to supplant the activity created by the taxpayer-financed Vikings stadium and the other downtown projects.
Jamey Flannery, owner of Flannery Construction in St. Paul, which does up to $20 million a year in projects, said she's balancing affordable-housing projects with nonprofit partners with small commercial developments.
"We're patient and we came out of the recession very lean and grew slowly since 2011," said Flannery, one of the few female construction-firm owners. "This year was very busy. But it takes a long time to develop affordable housing with the 'alphabet soup' of funding. And we do light commercial, under $2 million for most jobs, such as the new 'Italian Eatery' on Cedar Avenue S.
"We're not exactly Mortenson Construction," (general contractor on the $1 billion-plus Vikings stadium).