The site of a long-vacant Walmart store in St. Anthony will soon be replaced by nearly 500 rental apartments.

Twin Cities developer Kelly Doran said last week that he has secured a $49 million loan from Bremer Bank to build the project, which will take the place of the now-demolished big-box store he helped develop several years earlier.

“I was involved in developing the building [the Walmart store], and now we’re demolishing it,” said Doran. “That doesn’t happen every day.”

The nearly 11-acre project is at 3800 Silver Lake Road in the first-ring suburb adjacent to Minneapolis. It will include a pair of matching four-story buildings with 492 units that will wrap around a courtyard with an “amenity deck” that will include an outdoor swimming pool and fitness center.

The project is expected to be built in two phases in what’s known as Silver Lake Village, a mixed-use redevelopment with retail, services and housing that functions as a de facto downtown area for the suburb.

The site includes a Walmart that was part of the redevelopment of Apache Plaza, a shopping mall that had been built in the 1960s and was later razed. That Walmart opened in 2005, but closed in 2014 after a Walmart superstore opened less than 3 miles away in neighboring Roseville.

Doran’s project has been in the works since early 2019 and is something of a coup for St. Anthony. Vacant big-box stores have been a major problem for many suburbs and the situation is only expected to worsen through the recession.

“The Walmart site was empty for quite a while, so the city is happy to see something happening on the site,” said Charlie Yunker, interim city manager for St. Anthony. “Given the lack of demand for big-box retail and the ongoing demand for housing, the Doran project makes sense and fits quite well into the Silver Lake Village area.”

Other than Silver Lake Village, Yunker said, there are only a couple hundred rental units in the pipeline and most are senior housing that’s slated to start in the spring. St. Anthony is already one of the tightest rental markets in the metro.

Marquette Advisors said the average vacancy rate in St. Anthony during the third quarter was 2.5%, which is slightly below the metrowide average and on par with last year at the same time. The average rent was $1,215, also unchanged from last year. Doran said rents have yet to be set for his Silver Lake Village project, but will be in the $2 to $2.20 per-square-foot range.

The project will be developed, owned and managed by companies owned by the Doran family, which are separate from Doran Cos., the Bloomington-based company he founded. Doran sold his controlling stake in that company last year. Kelly Doran is using Doran Cos.’ architecture division and construction division as architect and general contractor for the St. Anthony project.

Doran said the first phase is set to begin construction next spring with preleasing in late 2021. It’s expected to attract “lifestyle renters,” including aging homeowners who already live in the area, and people who don’t want to live in Minneapolis, but want easy access to the city.

The buildings will include a mix of studios, one-, two- and three-bedroom apartments and a variety of amenities, including a more than 15,000-square-foot clubhouse with a game room, fitness center and clubroom. There will also be several “entertainment suites” with full-size kitchens, big screen TVs and gathering spaces aimed at baby boomers who are downsizing, but don’t want to sacrifice the big family gatherings they hosted in their larger suburban homes.

Since COVID-19, Doran said the project has been retooled slightly. He increased the size of the exercise rooms to allow for more separation of equipment and added 10 office areas geared toward people who need to work remotely.

“We’ve always had business centers,” said Doran. “These are mini offices where you can plug in and have [your] own space so you don’t have to work from your apartments.”