Giant apartment, retail complex is planned in Rochester's medical district

Two developers are teaming up to bring some Twin Cities flavor to ­Rochester's apartment scene.

Minneapolis-based Alatus LLC is partnering with the Pompeian family, longtime real estate developers in Rochester, on a proposed 13-story apartment tower that would visually change the main entrance from Hwy. 52 into the city's downtown and Mayo Clinic ­complex.

The $100-million plan is unique for Rochester in both size and style, introducing a luxury class of apartments that have become common in bigger cities, including the Minneapolis-St. Paul metro area, in recent years.

The development site is significant in that it falls just within the boundaries of the Destination Medical Center, a public-private initiative designed to spur economic development and maintain Rochester's position as the world's premier location for health treatment.

"Obviously, the city of Rochester has some pretty ambitious goals" for the center, said Chris Osmundson, a senior associate for Alatus. "We felt we could propose something a little bit unprecedented for Rochester."

Rochester has new apartment buildings, but none offer the high-end amenities found in so many of the Twin Cities latest luxury buildings, said Ed Pompeian, who owns the two-acre site.

The plans call for 359 rental units, with 49 of those being townhome-style units near the tower's base. Five levels of parking — two underground and three above ground, which are to be wrapped by the townhouses — would provide nearly 900 parking stalls. The plan also has about 13,000-square-feet of leasable commercial space on the ground floor. The developers think that will be used for a restaurant and a few smaller shops.

After multiple conversations with the city, Olmsted County, neighborhood groups and representatives for the Destination Medical Center, the developers decided to add 7,500 square feet of commercial space to the second floor for a co-working space.

"The intent is the space would be a mix of businesses that complement each other, but at a higher level," Osmundson said.

Local officials say dozens of IT-related companies have formed in Rochester as a result of Mayo's presence, but then moved their headquarters elsewhere, he said.

"Rochester wants to see all that human and economic capital stay there," Osmundson said. "They really want to place Rochester in a position to attract and retain the employees they need to keep Mayo going."

The developers say have tried to respond to that problem through certain elements of the project's design.

Two older motels currently occupy the site at the corner of Second Street SW. and 14th Avenue SW. A few years ago, Pompeian and his investors thought the market was ready for redevelopment of the prime parcels. Pompeian began conceptual design work for a hotel and apartments about half the size that's currently being proposed.

"Then we ran into Bob Lux [the principal at Alatus] and he had ideas that were bigger than what we had in mind," ­Pompeian said. "He saw the same thing I do. He just thinks bigger than I do."

It has taken two years to get to this point and it will take several more before it is complete. The project would be considered a restricted development, which means zoning and land uses changes need to be approved that will lengthen the process, Osmundson said.

The developers hope to break ground by the end of this year and finish construction in the spring of 2018.

Alatus has its plate full right now with a proposed 40-story condominium tower across the Mississippi River from downtown Minneapolis and recently winning the bid for the massive redevelopment of the former munitions plant site in Arden Hills.

Kristen Leigh Painter • 612-673-4767