United Properties enters Duluth market with apartment, retail project

Twin Cities developer United Properties is docking in Duluth.

The real estate firm on Wednesday unveiled a $20 million residential and commercial project that will signal its entry into Minnesota's second-largest market.

Called Kenwood Village, the proposed project includes 14,000 square feet of ground-level retail and up to 85 market-rate apartments in a four-story building.

The nearly two-acre site is at the southwest corner of two main thoroughfares, Kenwood Avenue and Arrowhead Road. The deal required three separate transactions to secure 11 contiguous parcels for a total of $1.28 million, according to St. Louis County property records. Nine of the parcels were bought from Duluth Teachers Credit Union and the remaining two from single-family homeowners on March 26 and 27, records show.

Five blocks north of the College of St. Scholastica and one mile northwest of the University of Minnesota Duluth, the project is "definitely targeting the academic market, but we are not student housing," said Keith Ulstad, a senior vice president for United.

Instead, Ulstad imagines a mix of visiting professors, graduate students or others who may desire proximity to the two campuses.

Bloomington-based United was led to the site by an undisclosed retailer it works with in the Twin Cities that wanted to be in Duluth.

"Our original plan was basically bringing sand to the beach. There's already a lot there. And we were taking away a prize corner that everyone has a vision for. It was kind of a yawner," Ulstad said.

Property owners at the site have seen several proposals fail.

"This has been a very contentious corner over the years, people have come and gone, and swung and missed," Ulstad said.

The Duluth Teachers Credit Union bought the land with plans to build a branch there. Other failed proposals include a McDonald's and a Walgreens.

"One of the people who we bought out commented at closing how many times he has been under contract only to fall out of bed at the last minute," Ulstad said.

"We've recently had growth of about 1,000-1,500 new jobs in engineering. These are young professionals coming from the Twin Cities and Madison, communities that have that type of product," said Keith Hamre, the city's director of planning and construction services.

United is offering the type of product that the city's research found desired: covered parking garages, secure buildings and within walking distance of commercial services. Rick McKelvey, a vice president for United working on this project, estimates that the apartments will be a mix of about 50 percent one-bedrooms, 30 percent two-bedrooms, 13 percent three-bedrooms and the rest will be studios.

The move is also indicative of United's slowly expanding radar as it eyes midsize Minnesota cities. In addition to this Duluth project, United is "actively pursuing" a development in Rochester and is considering ideas for land it owns in St. Cloud.

Now, Ulstad said, "We are basically in the big four."

Wednesday's announcement came less than a week after another Twin Cities developer, Doran Cos., announced construction of apartments at the Bluestone Lofts mixed-use development near UMD.