United Readies for $225M MXD Development

BLOOMINGTON, MN-United Properties has been given a tentative go-ahead for a planned multiphase project, with housing units, retail and office, to go over 28 separate parcels. This Penn American District development would cost somewhere close to $250 million, say United executives.

The company received rezoning and preliminary plan approval for the project at the intersection of Penn Avenue and American Boulevard here. United also recently closed on the purchase of land at 8051 Penn Ave. S., one of the parcels needed for the project, that includes the car dealership Metro Mitsubishi-Kia. The company will sell the property to the Bloomington Housing and Redevelopment Authority, which will hold the land until the entire project property is acquired. United has spent three years assembling the site, and had purchased a former Dodge dealership in August to start the site off, which was also sold to the authority. Per a prior agreement, the developer will buy the property back when all the parcels are acquired,

The property zoning is being changed from general business to freeway mixed-use, says John Breitinger, VP, retail development for United. “The city has been master-planning the area for this new district, about 120 acres,” he says. “It’s probably the best commercial site in Minnesota, there’s about 270,000 cars going by each day. It’s 1950s-vintage car lots, with very few buildings and lots of open parking. The site is very underutilized relative to its potential today. The local government put in a new east-west arterial boulevard, American, that connects everything in Bloomington. The community has aspirations to make this a livelier place.” The site is down the street from the Best Buy headquarters facility.

He says the first eight-acre phase of the project will include seven buildings, which will feature 58 housing units, 100,000 sf of office, and 100,000 sf of retail. “About 40,000 sf of the office will be for medical, and the rest will be used as multi-tenant professional office,” Breitinger says. “The first phase should cost about $75 million.” The company is in negotiations with a couple of lead tenants, but nothing has been signed yet, he says.

Assuming the community grants final approval, the first phase could begin as early as this summer. A second phase would take up to 12 more acres, and could cost up to $150 million, Breitinger tells GlobeSt.com. He says it’s too early to tell the makeup of the second phase. “We’ve done some master planning to get a sense of the overall values, but it will be three years before we even have access to that parcel, so we haven’t come up with specific tenant spaces yet.” The total development could take up to 10 years to complete, he says.

Part of the challenge for the entire project, he says, will be also building a new grid of streets and blocks to provide new access points to the site. The properties will resemble a downtown, with retail on the first floors and offices above. The housing will be off to one side, along a park that borders the site, Breitinger says.

There’s a draw for retail and housing on the site, thanks to its visibility, he says. However, the office space is another challenge. “Well, the timing is poor for the office, with the economic downtown and recent jobs data. The demand for office is a little soft. Maybe we’ll move that down the phases and build it later,” Breitinger says.