Eagan: Lockheed parcel at turning point

A plan to redevelop the soon-to-be-vacant Lockheed Martin campus in Eagan has taken a detour in recent months, but city officials and the developer now say they're working to get it back on track -- perhaps with a few changes, such as more new office space, fewer surface parking lots and maybe even an entertainment venue.

It's been almost a year since Minneapolis-based CSM Corp. proposed a large-scale retail center for the 47-acre parcel at the prime intersection of Pilot Knob and Yankee Doodle roads. The plan for big-boxes and smaller stores totaled about 500,000 square feet -- larger than Woodbury Lakes in Woodbury and about as large as the Costco-anchored Fountains at Arbor Lakes in Maple Grove.

Late last year, however, CSM withdrew its application, and the city paid $15,000 for a study of alternative land uses for the site. It hadn't been included in a previous study for the city's long-range plan because its future as a corporate campus seemed secure. A series of tech-related companies had operated on the property since the 1940s, and Lockheed had been there since 1996. The company's announcement in the fall of 2010 of plans to move early in 2013 was abrupt and unexpected.

"We look forward to moving [the project] forward," CSM Vice President Thomas Palmquist said at a City Council work session last week. The council was meeting to review the latest land use study done by Hoisington Koegler Group Inc. (HKG), which laid out eight possible redevelopment scenarios for the parcel. Only one closely resembled CSM's original retail-oriented plan.

The meeting wasn't set up to choose a plan, but some council members did voice preferences, indicating they would prefer to see a mix of uses, including more offices, some housing and an entertainment component.

"We already have a lot of strip malls with parking. I really see this to be more of a unique destination place," said Council Member Meg Tilley.

She said she'd like to see a center with "things that bring people in," like Edina's Centennial Lakes Plaza, which combines stores with features like a small pond for skating in winter and sailing miniature remote-controlled boats in the summer.

"We'll be meeting internally and with the city staff and trying to craft something that has support," Palmquist said. CSM owns the site and is committed to redeveloping it. The city has leverage because it needs to approve a change in the parcel's land use.

One hurdle involves possible changes to Pilot Knob Road, a key access point to the site. Dakota County has been doing a traffic study of the busy corridor, but the City Council recently said it's premature to plan changes in the road until more is known about what will be built on the Lockheed site. CSM, however, has said it wants to see the outcome of the Pilot Knob study before proceeding with a new redevelopment plan.

Eagan Development Director Jon Hohenstein acknowledged the standoff, saying it's a "chicken-and-egg issue" that needs to be resolved. "We will approach the City Council as part of the follow-up to the [HKG] study to determine the next steps in that regard," he said.

CSM continues to believe that a retail-oriented development anchored by a big-box general merchandiser like Target or Wal-Mart is the best option for the site. Other tenants could include sporting goods, home furnishings and health and beauty stores, as well as a specialty grocer.

Area commercial real estate brokers say Target, Wal-Mart, T.J. Maxx, Whole Foods, Trader Joe's and several sporting goods merchants have shown interest. Even though some have multiple outlets in the Twin Cities, they are under-represented in the Eagan trade area, said Richard Grones, whose Edina-based Cambridge Commercial Realty specializes in the retail market.

CSM has said it doesn't believe a department store or fashion-oriented retailers would work well on the site, because it's close to the Mall of America and to the upscale outlet mall being built in Eagan, on the 40-acre Cedar Grove redevelopment site.

Palmquist declined to comment on whether his firm would consider residential development in the project. CSM previously told the consultants that it did not see "an opportunity for housing as part of any development plan for the property."

It also turned thumbs-down on a hotel, noting that even though Eagan is close to Minneapolis-St. Paul International Airport, the neighboring Bloomington market is becoming over-supplied with hotels. CSM also said Eagan's business travel market has been hurt by significant downsizing by Delta Air Lines.

One of HKG's retail-oriented scenarios included a large entertainment anchor, most likely a movie theater. Palmquist said CSM is considering how it might incorporate an entertainment venue, although it might not be a movie complex. He also said the medical sector has expressed interest in offices that could be built as part of the project.

Council members also voiced opinions on the project's layout. "I don't want to see a sea of asphalt," said Cyndee Fields. CSM's original proposal called for street-level parking lots ringed by the stores. HKG's scenarios offered a variety of combinations of surface and underground parking, as well as some parking ramps.