Welsh Building Two Offices, Includes Own HQ

Welsh bought the property for $8.8 million in July 2006 from the large mail-order catalog operation, and now has a $30-million plan for the property. Bill Krake, president of Welsh Construction, tells GlobeSt.com that the company will tear down an existing 100,000-sf office building on the site, renovate another 89,000-sf office and build the facility that will house its headquarters. A following phase would include another 100,000-sf office building, Krake says.

With a lease up in June 2008, Krake says the company had a few reasons for making the move. "It's not just the growth of the company," he says. "We've got the opportunity to design, build, own and manage our own headquarters building. Also, most of the employees live over in this area, and we're only seven miles away from our current location."

The office market in the area is expanding, with several projects ready to start, Krake says. "I think there's a growing demand for office space on the west side of Minneapolis, and this will be good class A office space," he says. The building shell for the headquarters will cost about $10 million, or $100 per foot, to build, he says. Welsh will lease out the remaining space for about $14 to $15 per sf, net, Krake says.

Welsh asked for variances on the second phase building's height, at more than 45 feet tall, and a sign variance. "We believe this location is a natural site for development of a first class, small office campus with class 'A' office space," said Mike Schraad, vice president of Welsh, in a letter detailing the variances. The southwest Minneapolis suburb market has a 12.4% vacancy rate, with about 344,000 sf of new office under construction, according to a Grubb & Ellis fourth-quarter market report.

Currently, Petters Group Worldwide leases space in the existing 100,000-sf building. Welsh will renovate the 89,000-sf building, and Petters will move there, allowing Welsh to demolish the larger facility.

In 1996, the entire property sold for $5.9 million, says Minnetonka city planner Julie Wischnack. Welsh bought the property for $8.8 million in July 2006. Fingerhut, the large mail-order catalog operation, began its headquarters here in the 1970s.