HomeMy WebLinkAbout03/28/2013 EDA Meeting6
city of Apple
Valley
NOTICE: The Apple Valley Economic Development Authority will hold a
special informal meeting at the Municipal Center, on Thursday,
March 28, 2013, at 5:00 p.m. to consider the items listed in the
following agenda:
ECONOMIC DEVELOPMENT AUTHORITY INFORMAL MEETING
TENTATIVE AGENDA
MARCH 28, 2013 — 5:00 P.M.
1. Call to Order
2. Hanson Property Development Strategy and Next Steps
3. Central Village West Updates
4. Economic Development Updates in the City
5. Other Items
6. Adjourn
(Agendas are also available on the City's Internet Web Site http://www.cityofapplevalley.org)
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City of Apple I ,
Valley
Community Development Department
TO: President and Board Members of the Economic Development Authority,
Executive Director
FROM: Margaret M. Dykes, Planner
MEETING
DATE: March 28, 2013
SUBJECT: Hanson Concrete Site Development Strategy
MEMO
Background: The City received a $50,000 pre-development grant from the Metropolitan Council to hire a
consultant to examine the market mix and economic feasibility of potential future users of the 80-acre
Hanson Concrete site, northwest of the intersection of Johnny Cake Ridge Road and County Road 42. In
2010, the Hanson Concrete plant closed because the owner determined that it was no longer a viable
operation. The property was put on the market, and recently the south 50 acres was sold to Menards.
They have cleared the plant and all inventory from the site. A remaining north 30 acres remains available
for purchase at this time. The 2030 Comprehensive Plan designates the site as "IND" (Industrial), and the
property is zoned "1-2" (General Industrial). While the City continues to support industrial users on the
property, it requested funds for the study to determine how the site could be intensified for high j ob-
generating industrial uses with higher wages. The objective is to avoid low job-generating users such as
the former concrete plant and continue lower wage jobs such as those provided by retail.
Findings: The City retained the McComb Group, Ltd. (the "consultant") to complete the study. The
study is now complete and the consultant's findings are as follows:
• Apple Valley cannot rely on typical land marketing approaches of the real estate industry. Rather, a
marketing plan and key contacts need to provide positive separation from a crowded Dakota County
marketplace.
• The Hanson property is one of the largest vacant properties offered for sale in Dakota County. The
site has good access, but is not attractive to businesses with high truck volume due to the distance
from freeways.
• Because of surrounding retail, residential, parks, and schools, the site is no longer suited for true
heavy industrial uses.
• There are many competing business parks in Dakota County with substantial vacant space to
accommodate tenants seeking multi-tenant buildings. This may reduce demand for the creation of
another business park on the Hanson property.
• The medical office market continues to be strong, and aligns with Apple Valley's employment base.
• Other key industries that align with Apple Valley's employment base include bio tech, professional
services (insurance, software, financial business), advanced manufacturing, and research &
development centers; all priorities in the Greater MSP marketing strategy.
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• There are approximately 27,000 employed residents in Apple Valley, but roughly 24,000 of them
leave the City every day to work elsewhere in the Metro. Only 3,000 Apple Valley residents are
actually employed in Apple Valley. Approximately 10,000 people from outside the City are
employed in Apple Valley.
• Apple Valley has a higher proportion of lower paying jobs than Dakota County, and more employees
based in lower paying services jobs. The City should encourage industries with higher paying jobs on
vacant properties, such as Hanson.
• Encouraging development of the Hanson Site will need to take into consideration the new realities of
business park development. Apple Valley must develop a marketing plan that attracts attention and
stands out in the crowded development field.
The report lays out strategies that could be used to encourage development consistent with the City's
goals of high job-generating industrial businesses locating on the site. Working with the current property
owner, these efforts could include:
• Unified marketing effort directed at targeted business groups.
• Assisting in planning the mixed-use development and dividing of the site into smaller
development parcels that could be sold to users and developers.
• Place higher value, possibly multi-story buildings on 150 Street and one-story buildings on the
north portion of the site.
• Offer incentives for the targeted uses that could include tax increment financing and special
assessment districts.
• Seek to encourage public/private partnerships with utility companies and other companies to
reduce cost of occupancy in Apple Valley.
The Planning Commission received the report on February 20, 2013, and acknowledged the report may be
used to generate future land use decisions and policies. The Commission also recommended that staff
begin working with the current property owners to craft a unified marketing and development strategy
because this is the first step in generating new ownership and development on the site.
Next Steps:
• Work with Menards to facilitate development strategies for users consistent with the zoning.
• Prepare a "request for proposals" for marketing the site in cooperation with the owner.
• Share the study findings with Fischer Sand and Aggregate as the findings may be applicable to the
mixed business campus area south of County Road 42.
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Hanson Concrete Site
Development Strategy
HANSON CONCRETE SITE
DEVELOPMENT ST' • TEGY
August 2012
Prepared for
The City of Apple Valley
and the Apple Valley EDA
Prepared by
McComb Group, Ltd.
Economic Development Services, Inc.
Grubb & E11isiNorthco Real Estate Services
0 Copyright 2012 McComb Group, Ltd.
Chapter
TABLE OF CONTENTS
Subject Page
EXECUTIVE SUMMARY
Competitive Business Parks
Multi-Tenant Office Buildings
Multi-Tenant Office Showroom vi
Multi-Tenant Office Warehouse vi
Medical Office Buildings vii
Vacant Land vii
Broker Interviews vii
Economic Base viii
Employment ix
Future Employment
Marketing and Development Strategy xi
INTRODUCTION xv
Report Purpose xvi
HANSON CONCRETE SITE 1-1
Site Environs 1-1
Access 1-2
Utilities 1-4
Zoning 1-4
COMPETITIVE BUSINESS PARKS 2-1
Multi-Tenant Office Buildings 2-1
Proposed Multi-Tenant Office Buildings 2-4
Multi-Tenant Office Showroom 2-5
Multi-Tenant Office Warehouse 2-7
Multi-Tenant Bulk Warehouse 2-10
Vacant Land 2-13
Medical Office Buildings 2-15
Apple Valley Medical Office Buildings 2-16
Multi-Tenant Medical Office Buildings 2-16
Proposed Multi-Tenant Medical Office Space 2-18
EMPLOYMENT AND ECONOMIC BASE 3-1
Employment by Industry 3-1
2007 Census of Business 3-4
Employment Profile 3-5
Employment Inflow and Outflow 3-6
1
Chapter
TABLE OF CONTENTS (continued)
Subject Page
Demographic Characteristics 3-7
Work Location 3 -9
Residence Location 3-9
Educational Attainment 3-10
Job Creation 3-11
Future Employment 3-13
Health Care 3-15
IV BROKER INTERVIEWS 4-1
V DEVELOPMENT STRATEGY RECOMMENDATIONS 5-1
Marketing and Development Strategy 5-2
APPENDIX A
LIST OF TABLES
Table Title Page
i Change in Occupied Space: 2007 to 2011 and 2011 Vacancy Rate vi
1-1 Traffic Counts on Routes to Hanson Concrete; 2010 1-3
2-1 Change in Occupied Space: 2007 to 2011 and 2011 Vacancy Rate 2-1
2-2 Multi-Tenant Office Space: Total, Occupied, and Vacant Space; 2007 to
2011 2-2
2-3 Multi-Tenant Office Buildings Net Rent, Expenses, and Taxes by Class 2-3
2-4 Proposed Multi-Tenant Office Buildings 2-4
2-5 Multi-Tenant Office Showroom: Total, Occupied, and Vacant Space;
2007 to 2011 2-5
2-6 Multi-Tenant Office Showroom Buildings Net Rent, Expenses, and Taxes 2-7
2-7 Multi-Tenant Office Warehouse: Total, Occupied, and Vacant Space;
2007 to 2011 2-8
2-8 Multi-Tenant Office Warehouse Buildings Net Rent, Expenses, and Taxes 2-9
2-9 Multi-Tenant Bulk Warehouse: Total, Occupied, and Vacant Space; 2007
to 2011 2-11
2-10 Bulk Warehouse Buildings Net Rent, Expenses, and Taxes 2-12
2-11 Vacant Land: Apple Valley and Competitive Cities 2-14
2-12 Apple Valley Medical Office Buildings 2-16
2-13 Multi-Tenant Medical Office: Total, Occupied, and Vacant Space; 2007
to 2011 2-16
2-14 Multi-Tenant Medical Office Buildings 2-17
2-15 Proposed Multi-Tenant Medical Office Buildings 2-18
3-1 Employment by Industry; 2010: Apple Valley, Dakota County, and MSA 3-4
3-2 Apple Valley Establishments, Sales, Payroll, and Employees; 2007 Census
of Business 3-5
3-3 Worker Profile: Age and Earnings; 2010 Apple Valley, Dakota County,
and MSA 3-6
3-4 Labor Inflow and Outflow; 2009 Apple Valley and Dakota County 3-6
3-5 Labor Inflow and Outflow; 2009 Apple Valley and Dakota County by
Age, Income, and Industry 3-8
3-6 Work Location of Apple Valley and Dakota County Residents; 2009
Top Ten Communities 3-9
3-7 Residence Location of Apple Valley and Dakota County Employees; 2009
Top Nine Communities 3-10
LIST OF TABLES (continued)
Table Title Page
3-8 Employment Change and Job Creation Selected Industries: 2000 to 2007
and 2008 to 2010 3-11
3-9 Employment Change and Job Creation Health Care: 2000 to 2007 and
2008 to 2010 3-12
3-10 Employment Outlook; 2009 to 2019 Seven-County Minneapolis-St.
Paul, MN 3-13
3-11 Employment Outlook; 2009 to 2019 Seven-County Minneapolis-St.
Paul, MN 3-14
3-12 Health Care: Employment Outlook; 2009 to 2019 Seven-County
Minneapolis-St. Paul, MN 3-15
LIST OF MAPS
Map Title Page
1-1 Highway System Serving Apple Valley 1-2
2-1 Multi-Tenant Office Buildings 2-2
2-2 Multi-Tenant Office Showroom Buildings 2-6
2-3 Multi-Tenant Office Warehouse Buildings 2-9
2-4 Multi-Tenant Bulk Warehouse Buildings 2-11
2-5 Vacant Industrial and Business Park Land For Sale 2-13
2-6 Medical Office Buildings 2-15
LIST OF FIGURES
Figure Title Page
1-1 Hanson Site and Environs 1-1
3-1 Employment Site, Growth and Concentration for the Top Ten Industries
According to Employment Concentration, Twin Cities 3-1
3-2 Employment Size, Growth and Concentration for the Top Ten Industries
According to Size, Dakota County — 2005-2010 3-2
3-3 Employment Size, Concentration and Wages for the Top Ten Industries
According to Size, Dakota County 2010 3-3
3-4 Educational Attainment; 2011 3-10
iv
The former Hanson Concrete Plant (Hanson Site) occupies an 80-acre site in Apple Valley. The
property has been split into one 20-acre parcel north of 147 Street West and one 60-acre parcel
south of 147 Street West. The site is zoned industrial, consistent with its former use for
manufacturing concrete products. Now that the concrete plant has been decommissioned, the
site should be rezoned to accommodate development that is more compatible with market
demand and other nearby uses. The property to the south is guided Mixed Business Campus,
which would be appropriate for the Hanson Site.
Competitive Business Parks
Apple Valley competes with other communities in Dakota County for office and business park
development. Major business park building types include: office, office showroom, office
warehouse, and bulk warehouse. Market conditions for these buildings have been weak since the
great recession began in 2007. Changes in occupied space between 2007 and 2011, and 2011
vacancy rates are summarized in Table i. Apple Valley has experienced negative absorption in
the office and office showroom categories; while office warehouse occupancy increased
modestly. Vacancy rates are well above normal for all categories except office showroom.
In the competitive cities, absorption has been negative except for office space. Office warehouse
and bulk warehouse have been particularly weak. Vacancy rates are also well above normal.
Absorption trends and vacancy rates are similar in the Southeast Market Area also. These
market conditions indicate there is substantial vacant space to accommodate those tenants
seeking space in multi-tenant buildings in Dakota County.
CHANGE IN OCCUPIED SPACE: 2007 TO 2011 AND 2011 VACANCY RATE
(Square Feet)
Apple Valley
Office (9,548) 24.1 % 99,532 22.5 % 21,348 18.8 %
Office Showroom (3,752) 5.0 (80,783) 27.9 (37,164) 23.2
Office Warehouse 7,564 26.9 (306,523) 17.4 (374,339) 17.3
Bulk Warehouse (448,007) 10.5 (517,390) 10.5
Source: United Properties and McComb Group, Ltd.
EXECUTIVE SUMMARY
Table i
Competitive Cities Southeast Market Area
Amount Vacant Amount Vacant Amount Vacant
Multi-Tenant Office Buildings
In general, multi-tenant office space has experienced sluggish demand and high vacancy rates
over the past five years. Apple Valley has a relatively small amount of multi-tenant office space
(368,135 square feet), which hasn't changed since 2007. Occupied multi-tenant office space in
Apple Valley fluctuated between 288,860 square feet and 271,987 square feet between 2007 and
2010 and ended the period at 279,312 square feet in 2011. Apple Valley's vacancy rate for
multi-tenant space increased from 21.5 percent in 2007 to 24.1 percent in 2011.
Occupied office space in competitive cities totaled over 2.0 million square feet in 2007 and
increased moderately to 2.1 million square feet in 2011. During this period, the vacancy rate
increased from 14.0 percent to 22.5 percent as total space increased by 246,600 square feet.
Southeast Market Area communities' occupied space has ranged from 4.5 million square feet in
2007 to 4.7 million square feet in 2008, declined to 4.3 million square feet in 2010, and ended
the period at 4.5 million square feet in 2011. During this period, the vacancy rate increased from
13.4 percent in 2007 to 21.6 percent in 2010, before declining to 18.8 percent in 2011.
There are seven proposed multi-tenant office buildings with over 940,000 square feet of office
space in the Dakota County study area. Eagan developers are most aggressive with four
buildings proposed for a total of 564,000 square feet, Mendota Heights has two buildings
proposed for a total of 280,000 square feet, and Burnsville has one 100,000 square foot building
proposed.
Multi-tenant office buildings tend to be located along the major freeway corridors in Dakota
County including 1-35, I-35W, I-35E, 1-494, and TH-52. Apple Valley's commercial office
buildings are located some distance from these corridors.
Multi-Tenant Office Showroom
Apple Valley has a limited amount of office showroom space (121,000 square feet), which
remained constant between 2007 and 2011. Occupied space has ranged from 98.1 percent in
2007 to 100 percent in 2008 and 2009, 93 percent in 2010, and 95 percent in 2011 indicating a
very healthy market. Occupied office showroom space in competitive cities has ranged from
over 1.8 million square feet in 2007 to a peak of 2.0 million square feet in 2008, which was
followed by a gradual decline to 1.8 million square feet in 2011. During this period, the vacancy
rate increased from 11.9 percent to 27.9 percent, indicating weak market conditions.
In the Southeast Market Area, occupied space increased from over 2.4 million square feet in
2007 to in excess of 2.6 million square feet in 2008, and then gradually declined to 2.4 million
square feet. During this period, the vacancy rate increased from 10.3 percent to 23.2 percent, as
almost 700,000 square feet was added to the market.
Office showroom buildings are clustered in areas along I-35W, 1-94, TH-52, and CSAH 42 in
Apple Valley.
Multi-Tenant Office Warehouse
Apple Valley multi-tenant office warehouse space totaled 61,594 square feet in 2007 and was
fully occupied. Office warehouse space increased by 33,010 square feet to 94,604 square feet in
2008, but occupied space only increased by 10,473 square feet. The vacancy rate has remained
high ending the period at 26.9 percent in 2011.
Multi-tenant office warehouse space in competitive cities has declined from 6.2 million square
feet in 2007 to 5.9 million square feet in 2011. During this period, vacancy increased from
741,000 square feet to over 1.2 million square feet with the vacancy rate increasing from 10.6
percent to 17.4 percent.
vi
In the Southeast Market Area, occupied office warehouse space decreased from over 6.9 million
square feet to 6.6 million square feet; while vacancy increased from 10.7 percent to 17.3 percent.
Occupancy in multi-tenant office warehouse buildings has decreased in Apple Valley and in all
competitive market areas.
Multi-tenant office warehouse buildings tend to cluster along TH-13 in Burnsville and Eagan and
in the vicinity of the I-35E/I-94 interchange in Eagan and Mendota Heights.
Medical Office Buildings
Apple Valley has 13 medical office buildings that total over 220,000 square feet. Most of these
are smaller professional buildings under 10,000 square feet in size. Only three buildings are
relatively large--Health Partners Medical/Dental, Fairview Cedar Ridge Clinic, and Apple Valley
Medical Center, which range in size from 40,000 square feet to 60,000 square feet and represent
over 70 percent of the total medical office facilities in Apple Valley. The amount of medical
office space in Apple Valley remained unchanged during the period 2007 through 2011.
Occupied office space in multi-tenant medical office buildings in competitive cities increased
from about 380,000 square feet in 2007 to 412,000 square feet in 2011. During this period, the
vacancy rate declined from 13.9 percent to 9.6 percent.
In the Southeast Market Area, occupied medical office space increased from about 1.3 million
square feet to about 1.4 million square feet in 2011 and the vacancy rate declined from 15.2
percent to 13.3 percent. Medical office is the only category showing positive absorption in both
the competitive cities and Southeast Market Area.
Vacant Land
The Hanson Site, at 80 acres, is one of the largest vacant properties offered for sale in Dakota
County. There are three larger parcels--two in Lakeville and one in Farmington--which are not
as well located as Apple Valley. In the fall of 2011, there were 128 vacant parcels offered for
sale in Dakota County. Eighty-two of these parcels were less than 10 acres in size. Forty-one
parcels were larger than 10 acres in size and could accommodate large users that would consider
locating on the Hanson Site. In commercial listings, the Hanson Site was offered in two parcels
of 60 and 20 acres. The larger parcel has been purchased by Menards.
The distribution of vacant land parcels is different than the pattern of office buildings, office
showroom, and office warehouse buildings. Most of Apple Valley's vacant land parcels are
along CSAH 42 and are more conveniently located than those in competitive cities. Other vacant
parcels are located along the TH-52/TH-55 corridor in Inver Grove Heights and Rosemount, and
CSAH 50 and 1-35 in Lakeville. Many of these parcels are not as well located as the properties
located in Apple Valley.
Broker Interviews
Nineteen commercial real estate brokers with a history of working within Dakota County were
interviewed. Significant comments included:
vii
• Many respondents, when asked about long-term trends in the market related to Apple
Valley and the Hanson Site, suggested a variety of uses ranging from headquarters office,
light industrial, and multi-family. However, most respondents suggested light industrial
that did not require immediate access to major transportation corridors.
• Marketing to manufacturing, high technology, and larger companies has not been
successful in the past.
• Most respondents refer to Apple Valley as being off the main transportation corridors.
• Apple Valley does not have any planned business and industrial parks like most cities.
• Users that may find the area attractive in the next 10 to 15 years will be high technology
firms as other parts of the Metro Area fill up.
Survey respondents felt Apple Valley and the Hanson Site was appropriate for single purpose
corporate high tech office uses that were not dependent on convenient truck access.
Economic Base
Demand for business park development is related to employment growth in those business
categories that typically occupy office, office showroom, and office warehouse buildings.
In 2007, according to the Census of Business, Apple Valley's employment of 13,714 represented
0.89 percent of the Minneapolis-St. Paul Metropolitan Statistical Area (MSA) employment.
Those categories where Apple Valley's employment exceeded the average included Retail Trade
(2.22 percent); Educational Services (2.10 percent); Arts, Entertainment, and Recreation (1.82
percent); Accommodation and Food Services (1.47 percent); Other Services excluding Public
Administration (0.91 percent); and Public Administration (1.16 percent).
Industrial categories where Apple Valley employment was below the Metropolitan Area average
and that would be suitable for business park locations include Information (0.47 percent),
Finance and Insurance (0.58 percent); Real Estate and Rental and Leasing (0.80 percent);
Professional and Technical Services (0.39 percent); Management of Companies and Enterprises
(0.06 percent); Administrative (0.23 percent); and Health Care and Social Assistance (0.68
percent). These categories provide ample opportunity for locations in Apple Valley.
Apple Valley's business mix results in the City having a higher proportion (35.4 percent) of low
income jobs ($1,250 per month or less) than Dakota County (25.0 percent) and the MSA (23.8
percent). As a result, Apple Valley has a smaller proportion (33.5 percent) of employees earning
more than $3,333 per month than Dakota County (43.4 percent) and the MSA (46.0 percent).
Much of this skewed income distribution is a result of the large number of jobs in retail, service,
accommodation, and food service.
Apple Valley had 26,849 employed residents in 2009. Those residents living and employed in
Apple Valley totaled 3,094; while the remaining City residents (23,755) commuted to work
outside Apple Valley.
viii
Employment in Apple Valley was 13,683 in 2009, with 10,589 of these employees commuting
from outside Apple Valley. As indicated previously, Apple Valley residents working within the
City totaled 3,094. Apple Valley residents employed in the City:
• Tend to be younger and older than those in Dakota County.
• Earn less money with 42.4 percent earning $1,250 or less, compared to 28.9 percent
in Dakota County.
• Have a smaller proportion of employees earning $3,333 per month (27.9 percent) than
Dakota County (39.6 percent).
• Hold jobs in service industries, 70.9 percent compared to 64.2 percent in Dakota
County.
• Goods-producing employment in Apple Valley is 3.6 percent compared to 14.3
percent in Dakota County.
Apple Valley employers attract workers that live outside Apple Valley or Dakota County.
Significant findings about this inflow worker include:
• Apple Valley has a higher proportion of lower paid inflow workers than Dakota
County. Workers in the $1,250 per month or less category were 33.8 percent
compared to 22.7 percent in Dakota County.
• Inflow workers with incomes over than $3,333 per month represent only 33.6 percent
of the Apple Valley workers compared to 44.8 percent in Dakota County.
• Apple Valley has fewer inflow workers employed in goods-producing industries than
Dakota County. Almost three-quarters (71.8 percent) of Apple Valley inflow workers
are employed in the all other services category compared to 56.2 percent in Dakota
County.
The truly significant differences are that jobs held by Apple Valley residents and inflow jobs are
lower paying and more heavily concentrated in service industries than for Dakota County. This
is a reflection of Apple Valley's large number of retail and service establishments.
Apple Valley should seek to use its vacant and under developed land areas to encourage
industries with higher paying jobs.
Apple Valley and the MSA have a similar proportion of residents with graduate degrees (12.8
percent) compared to 10.9 percent nationally. In addition, more Apple Valley residents have
bachelors and associates degrees (29.1 percent and 10.3 percent, respectively) than both the
MSA and the United States.
Employment
Changes in employment from year to year can mask employment changes that are occurring
within each individual industry category. Minnesota Department of Employment and Economic
Development (DEED) prepares a report that keeps track of total employment, net job flows, job
creation, new hires, separations, and turn over. What is in the job creation component of this
ix
database is significant. It identifies the number of employees hired to fill new job positions.
This could be a new position in an existing company or employment by a new company. This
information, contained in Table 3-8 on page 3-11 of this report, is available for 105 industries.
This table indicates that within individual industry categories, the employment change may be
negative, but job creation can be positive.
Using Computer and Electronic Product Manufacturing from that table as an example, total
employment between 2000 and 2007 declined by 217, but 1,272 new jobs were created in
Dakota County. In the recessionary period that followed, total employment increased by 92 jobs
and 297 new jobs were created. In the MSA, overall job creation was even more dramatic.
Between 2000 and 2007, while total employment declined by 7,518 positions, 11,359 new jobs
were created. In the period between 2008 and 2010, total employment declined by 6,483, and
4,773 jobs were created. The comparisons are similar for other categories.
Health care is an obvious growth industry and is likely to continue to expand. Job creation in
this category is closely related to total employment change. In Dakota County, Ambulatory
Health Care employment increased by 2,552 between 2000 and 2007, as shown in Table 3-9 on
page 3-12 of this report. Job creation represented 1,711 of that employment increase. In the
more recent period, total employment change was 372 and job creation was 735. The
relationship between employment changes in the MSA is even more dramatic.
To the extent job creation is occurring in businesses that are growing or in new companies, this is
an opportunity for business relocation or a new business location. Capitalizing on this
information requires new approaches to business development to find ways to identify those
businesses that are creating jobs.
Future Employment
Future estimates of employment in the Seven-County Metropolitan Area prepared by DEED
indicate that total employment will increase from 1,685,500 employees in 2009 to 1,829,600 jobs
in 2019, an increase of about 144,100 jobs, or 8.5 percent. These projections include full- and
part-time jobs and not the number of employed persons. This information is the best available to
indicate those business categories where employment is expected to increase, generating demand
for additional office or manufacturing space.
The Goods-Producing Domain is expected to decrease by 3.1 percent; while the Service-
Providing Domain is expected to increase by 9.9 percent. Within the Service-Providing Domain,
all industry categories except Information are estimated to have increased employment. It is the
Service-Providing Domain that provides the greatest opportunity for employment growth in
Apple Valley. The full list of business categories that are suitable for Apple Valley are
contained in Table 3-11 on page 3-14 of this report.
Health care employment is estimated to increase by 20.3 percent between 2009 and 2019.
Estimated increases in employment in individual categories range from 11.6 percent to 55.8
percent. The fastest growing categories are Medical and Diagnostic Laboratories, Outpatient
Care Centers, Offices of Physicians, Home Health Care Services, and Other Ambulatory Health
Care Services, all of which are expected to grow at greater than 30 percent over the 10-year
period.
Marketing and Development Strategy
The 80-acre Hanson Site is over one-half of the available business park land in Apple Valley.
There are currently 39 parcels of land 10 acres or larger offered for sale in Dakota County
competitive cities. These parcels total 1,225 acres, and the Hanson Site is the 3rd largest.
Though there are many alternative properties for development in the region, the Hanson Site is
well located and suitable for more intensive development that could provide an opportunity for
higher income jobs for Apple Valley residents and provide more balance to the City's job
market. However, at the present time, there is little to distinguish the Hanson Site from the other
parcels. This must be changed if development is likely in the near future.
The strategy to encourage development of the Hanson Site will need to take into consideration
the new realities of business park development. In the past, Dakota County has enjoyed
generally solid growth in its office and business park development. This has changed. It's no
longer sufficient to list property with a broker, install a sign, and hope that someone will call.
The brokerage community tends to overlook Apple Valley because it does not have an
established business park with developable sites. As a result, Apple Valley cannot rely on the
usual land marketing procedures of the real estate industry which everyone else is using.
Apple Valley must develop a marketing plan that it attracts attention and stands out in the
crowded development field. This plan should capitalize on Apple Valley's many strengths
including:
• Apple Valley's residential lifestyle and attractive neighborhoods to reinforce the "close to
home" business location criteria, which is important to many executives.
• High level of educational attainment compared to the nation.
• High concentration of scientific, technical, and professional service occupations
compared to the nation.
• Apple Valley's proximity to MSP International Airport (14 miles) and the international
destinations served by Delta with direct flights or connections through Amsterdam.
• U.S. headquarters of Uponor, the largest supplier of heating and cooling pipe in North
America.
• Utilize Apple Valley's significant retail presence to expand the presence of health care
and medical services, both to individuals and other health care industry participants.
Apple Valley needs to take control of marketing messages and implement a consistent marketing
and development approach.
Much of the available business park land in Apple Valley is in the hands of aggregate producers,
which is nearing the end of its life cycle in Apple Valley. The Hanson Site and other aggregate
mining parcels total about 300 acres. These owners are not business park developers.
xi
Aggregate landowners in Maple Grove faced a similar situation. The approach used in Maple
Grove involved the landowner forming a development relationship with a capable developer to
market the site and take down land as development opportunities arose. This created a monopoly
situation where a potential business had to negotiate with the selected developer.
In some cases, cities seeking to increase development have purchased land and developed a city
sponsored business park. This approach creates an opportunity where any developer can
purchase and develop a building with city help. The drawback is that the city has to buy the land
and install infrastructure and issue bonds to pay the costs before land can be developed. This
places the city in a position of considerable risk.
The approach suggested in this report provides a less risky and more open approach. Apple
Valley could establish a public/private to take an active role in marketing development
opportunities on the Hanson Site and other vacant business park land in the City. This entity
could provide general marketing for Apple Valley and be a focal point for development
inquiries. The public/private partnership would also provide marketing and development
planning services under contract for landowners. The partnership could operate with a limited
staff and use subcontractors to provide specialized services such as marketing, advertising,
research, local, national and international business recruitment, and other services. Business
park property owners would authorize the partnership to market their property and pay a
commission and marketing reimbursement fee when a property was sold. Additionally, the
partnership could contract for and supervise platting and site design services. The objective is
for the partnership to be a one stop development agency for the City and landowners. It would
also create an open playing field for developers since it would be a facilitator bringing a potential
tenant to Apple Valley and any developer could develop on land represented by it.
Any developer or business seeking a site could purchase land from an Apple Valley landowner.
This expands the number of developers that could consider Apple Valley as a location. The
partnership promotes Apple Valley and its business parks, but does not incur the carrying costs
or risk. The city also has the flexibility to use the professional and development resources that
are suitable for each development opportunity.
Strategies that can be employed to encourage proper development by working with the current
property owners could include:
• Unified marketing effort directed at targeted business groups.
• Assisting in planning the mixed-use development and dividing the site into development
parcels within the site that could be sold to users and developers.
+ Place higher value, possibly multi-story buildings on 150 Street and one-story buildings
on the north portion of the site.
• Offer incentives for the targeted uses that could include tax increment financing, tax
abatement, and special assessment districts.
xii
• Seek to encourage public/private partnerships with utility companies and other companies
to reduce cost of occupancy in Apple Valley. These partnerships may include installing
infrastructure using incentives and working with suppliers and business partners that may
have an interest in co-locating with Uponor.
Apple Valley should focus on attracting companies within those business groups where the City
has a competitive edge. The City should cooperate and use the resources of Greater MSP in
support of its activities. Greater MSP has identified the key industries and business sections that
are most important now and in the future. Those business categories that are compatible with
Apple Valley and Dakota County include:
Bio Tech
Health Care Providers
Health Care Payers
Health Care IT
Software/IT
Insurance
Corporate Headquarters
Professional Services
R & D Centers
Advanced Manufacturing
Energy/Renewables
Creative Services
Apple Valley should also explore the potential for a Global Innovation Park focused on
sustainability capitalizing on European leadership in this area. The Global Innovation Park
would focus on incorporating advanced technology to reduce energy consumption, reduce carbon
footprint, and other conservation related activities. This could include knowledge transfer of
European techniques to the United States. Using a local company that has European
connections, such as Uponor, could be a component of the Global Innovation Park.
Uponor is widely recognized in green industry circles for its leadership in energy efficient
heating and cooling systems, including geothermal and district heading technology. Minnesota
was recognized as the fourth most sustainable state in the United States by Site Selection
magazine in July 2011. A sustainable approach could strengthen marketing of the site and attract
high quality tenants. Minnesota provides national leadership in energy related fields including
Honeywell controls, Daikin McQuay industrial heating and cooling, and the glass cluster that
stretches from Burnsville to Owatonna near 1-35. The opportunity to develop the site in a cost
effective but sustainable manner should be pursued including transit links and possible LEED
certification. Possible partnerships with Uponor and/or Xcel Energy should be explored.
Professional and technical services related to health care are a growth niche well suited to the
Twin Cities and Apple Valley. These are services that can be made available regionally,
nationally, or globally. Examples of some services that demonstrate growth potential and are a
good fit for the Hanson Site and area workforce include:
• Medical services including, but not limited to: physician's offices, surgical centers, and
diagnostic services.
+ Sophisticated medical reference laboratories and genetic testing.
• Processing/production — drug compounding for generic drugs; pharmacies that handle
monthly or quarterly refills by mail.
. Medical informatics/payment processing.
These recommendations are consistent with objectives to create higher income jobs in Apple
Valley, increase the community business diversity, and create high value buildings and tax base.
xiv
INTRODUCTION
McComb Group, Ltd. was engaged by the City of Apple Valley to assist the Community
Development department in preparing a market analysis to determine future business park users
for the Hanson Concrete Plant site. Work tasks conducted as part of this engagement are
summarized below.
• The Hanson Concrete site was visited and evaluated to determine its suitability for
business park development. Factors that were evaluated include, but were not limited to:
location, current conditions, access, ingress/egress, visibility, utility and fiber optic
services, pipelines, and relationship to adjacent uses. Site and community assets that
enhance development, and potential impediments to site redevelopment were identified.
• Existing business park locations in Dakota County were identified. This task updated the
previous McComb Group inventory of space and identified multi-tenant office, office
warehouse, and office showroom buildings. The amount of vacant land that was zoned
industrial and asking prices were identified. This analysis focused on the cities of Apple
Valley, Burnsville, Eagan, Farmington, Lakeville, Mendota Heights, Inver Grove
Heights, and Rosemount, which contain the major competitive business parks. Total
square footage, current occupancy, vacancy, and date constructed were identified. For
multi-tenant buildings, net rent, operating expense, and property taxes were determined.
This inventory focused on buildings of 20,000 square feet or larger. Business park
buildings that are under construction, planned, and/or proposed were also identified
including size and type of building.
• Telephone interviews were conducted with economic development organizations and
other resources familiar with business and industrial development activities in the Metro
Area and Dakota County to identify Dakota County and Apple Valley strengths and
weaknesses for business development. In addition, this task sought to identify business
categories that are growing and/or may need new facilities, or that may be seeking to
locate in Dakota County.
• Employment trends in the Minneapolis-St. Paul Metropolitan Statistical Area (MSA),
Dakota County, and Apply Valley were compiled for business park inclined employment
categories to establish a relationship between employment in these categories and
absorption of business park space. Employment growth forecasts for the MSA were
obtained and evaluated for candidate industries for Apple Valley.
• Developers and brokers active in the Dakota County area were interviewed to gain their
perspective on strengths and weaknesses of Dakota County and Apple Valley, demand
for space, market opportunities, and their impressions of Apple Valley and the Hanson
Concrete site as a business park location.
• Trend identification and strategy formulation focused on reviewing results of previous
work tasks to identify:
• Apple Valley and Dakota County strengths and how to capitalize on them.
• Apple Valley and Dakota County weaknesses and determine if they can be
mitigated or are unimportant for some businesses.
xv
• Which businesses or technologies can benefit from Apple Valley's strengths.
• Which businesses or technologies have site and location criteria that are
consistent with Apple Valley.
• How Apple Valley and the Hanson Concrete Site can be more cost efficient than
competitive sites.
• If existing Apple Valley business can become a contributor to attractive
businesses to Apple Valley.
• How to engage the current owner in a plan to market and develop the site to the
types of businesses identified in the research.
The results of this task were utilized to develop an implementation strategy.
• Based on the results of the market research tasks, the consultant team prepared an
implementation strategy to capitalize on market demand identified for potential users.
• The Apple Valley zoning code designation for uses suitable for the Hanson Concrete site
were reviewed to determine if revisions are needed to attract the types of uses desired by
Apple Valley. The objective was to have zoning designations that are attractive to a wide
range of higher quality business park developments.
This report contains the primary information needed to support the principal conclusions.
However, in a report of this nature, it is not possible to include all of the information that was
developed and evaluated. Any additional information will be furnished upon request.
Report Purpose
This report was prepared in accordance with our proposal dated August 31, 2011. This report
was prepared with the understanding that the results of our work will be used by the client to
develop and implement development strategies for the Hanson Concrete Site.
xvi
Chapter I
HANSON CONCRETE SITE
The former Hanson Concrete Plant (Hanson Site) occupies an 80-acre site in Apple Valley. The
property has been split into one 20-acre parcel north of 147 Street West and one 60-acre parcel
south of 147 Street West. The site is zoned industrial, consistent with its use for manufacturing
concrete products. The site is bounded by CSAH 42 on the south, Johnny Cake Ridge Road on
the east, Johnny Cake Ridge Park on the north, and Magellan Pipeline Company tank farm on the
west, as shown in Figure 1-1. The site is currently occupied by an office building, garage, and
large remnants of the former cement manufacturing plant. The site is generally level with a
gravel surface. A depression, which could be a detention pond, is located in the northwest corner
of the 60 acre parcel. The site is divided into two parcels by an existing jet fuel pipeline and
right-of-way that bisects the site in an east by northeast direction.
IT
14,
..74A" &tat ,1/41
1447Z
Source: City of Apple Valley.
An extension of 147 Street, to be completed in 2012, will be located as shown on Figure 1-1.
The area north of 147 Street contains about 20 acres. The Hanson Site currently has three
access points: two from CSAH 42 and one from Johnny Cake Ridge Road.
Site Environs
Figure 1-1
HANSON SITE AND ENVIRONS
The area south of the Hanson Site along CSAH 42 is undergoing transition from gravel mining to
other uses. The southeast corner of CSAH 42 and Flagstaff Avenue was recently rezoned for
retail use. The balance of the area south of CSAH 42 remains part of an active gravel mine
operated by Fischer Sand & Aggregate. The area east of Johnny Cake Ridge Road, north of
1-1
CSAH 42 is occupied by a business park. Uponor's North American Headquarters and
manufacturing plant occupies a major portion of this area. North of 147 Street, a new light
industrial building is under construction by R.J. Ryan Construction. The area to the northeast is
occupied by single family homes. The aforementioned Johnny Cake Ridge Park lies to the north
of the Hanson Site adjacent to a high school situated to the west. West of the Hanson Site, the
north half of the Magellan Tank Farm is currently vacant. A major portion of this site will lie
north of the proposed 147 Street. Flagstaff Avenue is currently being extended north from
147 Street improving the area's access.
Access
The Hanson Site has excellent access by way of CSAH 42 which extends west from TH-52 in
Rosemount to I-35E and I-35W to the west. Primary north/south access is provided by TH-77
(Cedar Avenue), which extends south from interchanges with I-35E, 1-494 in Bloomington, and
TH-62 in Richfield. TH-77 is a freeway until it reaches 140 Street in Apple Valley. Johnny
Cake Ridge Road is a major collector extending north from CSAH 42 to CSAH 32 in Eagan.
Traffic counts in the vicinity of the Hanson Site in 2010, contained in Table 1-1, were 27,500 on
CSAH 42 on the southern boundary and 7,900 trips on Johnny Cake Ridge Road on the east side
of the site.
Major freeways serving northern Dakota County include I-35E, TH-77, and TH-52. Each of
these freeways are major river crossings, as shown on Map 1-1, and connect Dakota County and
Apple Valley to Minneapolis, St. Paul, and the metro area north of the Minnesota and
Mississippi Rivers. These routes provide convenient access to Apple Valley and the Hanson
Site.
0 Copyright 2012 McComb Group, Ltd.
Map 1-1
HIGHWAY SYSTEM SERVING APPLE VALLEY
1/12
Traffic counts on these highways in 2010 are contained in Table 1 -1. TH -77 is the major
north/south route to Apple Valley, and CSAH 42 is the major east /west route. Both roads carry
significant traffic volumes.
Table 1 -1
TRAFFIC COUNTS ON ROUTES TO HANSON CONCRETE; 2010
Cedar Avenue south from I 35E
South of I -35E
South of McAndrews
North of CSAH 42
CSAH 42 east from 1-35
East of I -35W
East of I -35E
West of Cedar Avenue
East of Cedar Avenue
West ofJohnny Cake Ridge Road
CSAH 42 west from TH 52
West of TH -52
East of TH -3
West of TH -3
East of Diamond Path
East ofPilot Knob
West ofJohnny Cakre Ridge Road
Location Count
Source: Minnesota Department of Transportation.
Traffic counts on Cedar Avenue south of I -35E were 73,000 declining to 46,500 north of CSAH
42. The Hanson Site is about 1.5 miles east of Cedar Avenue. Traffic counts on CSAH 42 east
of TH -77 were 35,500 and 27,500 at the Hanson Site. The non - freeway segment of this route is
about 2.5 miles.
Access from I -3 5 W and I -3 5E to the west is by way of CSAH 42, an urban four lane road. The
interchanges between I -3 5E and I -3 5 W with CSAH 42 occur 4.25 and 4.75 miles, respectively,
to the west. Traffic counts on CSAH 42 between I -35W and I -35E were 52,000 in 2010. Traffic
counts drop sharply to 28,000 trips east of I -3 5E and remain steady to Cedar Avenue three miles
to the east. Traffic counts increase to 35,500 east of Cedar Avenue, and decline to 27,500 at the
Hanson Site.
TH -52 connects the metro area to Rochester and southeastern Minnesota and I -90. The TH -52
interchange with CSAH 42 is located eight miles to the east. Traffic counts on CSAH 42 west of
TH -52 are 11,800 and increase to 13,300 east of TH -3. Traffic counts increase to 17,400 trips
west of TH -3 and 27,500 at the Hanson Site.
73,000
55,000
46,500
52,000
28,000
28,000
3 5, 500
27,500
11,800
13,300
17,400
20,400
19,700
27,500
Apple Valley enjoys frequent bus service from the Apple Valley Transit Center at 155 Avenue
on Cedar Avenue. Bus routes connect Apple Valley to Minneapolis, St. Paul, Bloomington,
Burnsville, Eagan, Rosemount, and Lakeville. Transit service will soon be enhanced by the
Cedar Avenue Bus Rapid Transit, which will provide high frequency service and connect to the
Hiawatha LRT route at the Mall of America Transit Station. This will provide convenient access
to MSP International Airport, the University of Minnesota, downtown Minneapolis, and
connections to destinations on the Central Avenue LRT.
The long distances from freeways are a deterrent to businesses with high truck volume. Access
for employees is good since most Apple Valley employees live in surrounding communities or
reverse commute from Minneapolis, St. Paul, and other communities north of the Minnesota and
Mississippi Rivers.
Utilities
The Hanson site is served by City water and sewer. Natural gas is provided by CenterPoint.
Electric service is provided by Xcel Energy. Conduit for fiber optic cable is being installed in
the 147 Street ROW.
Zoning
The Hanson Site is currently zoned 1-2, which was consistent with its previous use. Hanson
Concrete's predecessor developed the site in 1965 when Apple Valley was a rural township
without municipal services or hard surfaced roads. As the area grew and incorporated, it was
natural to zone the Hanson Site 1-2 based on its use at the time. Over the past 50 years,
development has occurred nearby which includes retail, parks and recreation, schools,
residential, and increased traffic counts that suggest a more intensive, higher, and better use of
the Hanson Site that is not dependent upon heavy truck traffic.
When the 2030 Comprehensive Land Use Plan was completed in 2009, Hanson Concrete was
fully operational producing reinforced concrete pipe, which generated heavy truck traffic both
for receiving of raw material and delivery of finished products. Given the size of the facility,
site, and capital investment, it was logical to maintain the site's 1-2 zoning. However, the facility
has closed and been decommissioned. Had this change taken place at the time the
Comprehensive Plan was updated, the Apple Valley community may have guided the site's use
differently. The property to the south is guided Mixed Business Campus, which would be
appropriate for the Hanson Site.
Apple Valley competes with other communities in Dakota County for office and business park
development. Major competitive cities include: Burnsville, Eagan, and Mendota Heights. Major
business park building types include: office, office showroom, office warehouse, and bulk
warehouse. Market conditions for these buildings have been weak since the great recession
began in 2007. Changes in occupied space between 2007 and 2011, and 2011 vacancy rate are
summarized in Table 2-1. Apple Valley has experienced negative absorption in office and office
showroom; while office warehouse occupancy increased modestly by 7,564 square feet.
Vacancy rates are well above normal for all categories except office showroom. In the
competitive cities space absorption has been negative except for office space. Office warehouse
and bulk warehouse have been particularly weak. Vacancy rates are also well above normal.
These market conditions indicate that there is substantial vacant space to accommodate those
tenants seeking space in multi-tenant buildings in Dakota County. Market conditions for each
building type are described in the following pages.
Office
Office Showroom
Office Warehouse
Bulk Warehouse
MULTI-TENANT OFFICE BUILDINGS
Chapter II
COMPETITIVE BUSINESS PARKS
(9,548)
(3,752)
7,564
Table 2-1
CHANGE IN OCCUPIED SPACE: 2007 TO 2011 AND 2011 VACANCY RATE
(Square Feet)
Source: United Properties and McComb Group, Ltd.
Apple Valley Competitive Cities
Amount Vacant Amount Vacant
The real estate industry maintains databases of multi-tenant buildings, since that is where most of
the leasing activity occurs. This analysis is based on information obtained from United
Properties, a Twin Cities area real estate company, augmented by information from the City of
Apple Valley, Greater MSP, Commercial Real Estate Minnesota, and McComb Group, Ltd.
Multi-tenant office space includes three classes of offices; Class A, usually 200,000 square feet
or larger, constructed after 1980 with business amenities; Class B, older buildings, usually
renovated and in good location; and Class C, older, not renovated building of any size in average
to poor condition. Only buildings with 20,000 square feet of space are included.
Apple Valley and surrounding communities multi-tenant office buildings are shown on Map 2-1.
Table 2-2 contains total, occupied, and vacant multi-tenant office space for the years 2007 to
2011.
24.1 %
5.0
26.9
99,532 22.5 %
(80,783) 27.9
(306,523) 17.4
(448,007) 10.5
0 1 Z 3 4
Rd 40
t
Copyright 2 12 McComb Group, Ltd.
Apple Valley
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Competitive Cities
Total Space
Occupied Space
Vacant Space
Vacancy Rate
South Airport
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Source: United P roperties
Map 2-1
MULTI-TENANT OFFICE BUILDINGS
MULTI-TENANT OFFICE SPACE
TOTAL, OCCUPIED, AND VACANT SPACE; 2007 TO 2011
2007
368,135
288,860
79,275
21.5 %
2,491,505
2,022,694
349,833
14.0 %
5,205,817
4,508,460
697,357
13.4 %
2008
Table 2-2
368,135
278,002
90,133
24.5 %
2,638,757
2,145,471
374,308
14.2 %
5,481,231
4,719,341
761,890
13.4 %
2-2
2009
368,135
272,980
95,155
25.8 %
2,638,757
2,142,439
377,340
14.3 %
5,481,231
4,521,706
959,525
17.5 %
2010
368,135
271,148
96,987
26.3 %
2,738,099
1,984,137
634,984
23.2 %
5,580,573
4,376,309
1,204,264
21.6 %
2011
05/30/12
368,135
279,312
88,823
24.1 %
2,738,099
2,122,226
615,873
22.5 %
5,580,573
4,529,808
1,050,765
18.8 %
In general, multi-tenant office space has experienced high vacancy rates over the last four years.
Apple Valley has approximately 368,135 square feet of multi-tenant office space, which hasn't
changed since 2007. Multi-tenant vacant office space in Apple Valley fluctuated between
80,000 square feet and 97,000 square feet between 2007 and 2010 and dropped to 89,000 square
feet by 2011. However, Apple Valley's vacancy rate for multi-tenant office space was 24.1
percent in 2011, which is similar to the trend of the prior four years.
Competitive cities of Burnsville, Eagan, and Mendota Heights have seen an increase in multi-
tenant office space over the past four years, increasing from 2.5 million square feet to over 2.7
million square feet. At the same time, vacancy rates increased from 14.0 percent in 2007 to 23.2
percent in 2010, declining modestly to 22.5 percent in 2011.
South Airport submarket communities include the additional cities of Richfield, Bloomington,
and St. Paul. This region had 5.2 million square feet of multi-tenant office space in 2007, which
increased by 375,000 square feet resulting in a total of approximately 5.6 million square feet in
2011. Multi-tenant office space vacancy in this region increased steadily from 13.4 percent in
2007 to 21.6 percent in 2010, and declined to 18.8 percent in 2011.
Rental rates, expenses, and taxes for multi-tenant office buildings are contained in Table 2-3.
Average net rental rates by class for Apple Valley multi-tenant office buildings range between
$10.67 per square foot and $18.00 per square foot, with an average of about $13.70 per square
foot. Expenses range from $4.42 to $8.07, and taxes average $3.85 for Apple Valley multi-
tenant office buildings.
City/Class
Rent Rate
Table 2-3
MULTI-TENANT OFFICE BUILDINGS
NET RENT, EXPENSES, AND TAXES BY CLASS
Low High Expenses Taxes Buildings
Apple Valley
A $ 12.67 $ 18.00 $ 4.96 $ 3.91 4
B 10.67 13.35 8.07 4.01 4
C 14.00 4.42 3.43 1
Burnsville
A $ 12.08 $ 16.17 $ 5.94 $ 4.21 6
B 11.28 13.08 5.74 3.35 19
C 10.48 13.00 5.64 3.21 4
Eagan
A $ 14.18 $ 17.74 $ 6.46 $ 4.03 12
B 12.81 12.96 5.69 3.46 18
C 8.88 9.50 5.12 2.48 4
Mendota Heights
A $ 12.25 $ 13.25 $ 7.39 $ 3.27 4
B 11.27 11.50 2.49 2.77 15
C 8.50 5.70 1.51 1
Lakeville
A $ 13.32 $ 2.13 $ 4.71 6
B 14.69 16.55 4
C 16.00 1
Inver Grove Heights
B $ 11.50 $ 13.00 $ 3.20 2
10.00 14.00 1
Source: Greater MSP , United P roperties, CornmercialRealEstate Minnesota.
Burnsville has 29 multi-tenant office buildings ranging in size from 4,200 square feet to 141,600
square feet. Average rental rates by class range from $10.48 to $16.17 per square foot, with an
average of $12.12 per square foot. Expenses range from $5.64 to $5.94 and taxes range from
$3.21 to $4.21.
Eagan has the largest concentration of commercial office buildings within the Dakota County
study area. In total, Eagan has 34 commercial office buildings, with four buildings representing
almost one-third of the total multi-tenant office space in Eagan. Multi-tenant office buildings in
Eagan range from 5,675 square feet to 150,000 square feet with average rents ranging from $8.88
per square foot to $17.74 per square foot. Expenses range from $5.12 to $6.46 and taxes range
from $2.48 to $4.03.
Mendota Heights has 20 multi-tenant office buildings ranging in size from 3,072 square feet to
140,000 square feet. Average net rental rates by class range from $8.50 to $13.25 per square
foot with the average rent for Mendota Heights commercial office buildings at $11.61 per square
foot, the lowest average rental rate within the study area. Total expenses and taxes average about
$6.82 per square foot with average expenses ranging from $2.49 per square foot to $7.39 per
square foot, and average taxes ranging from $1.51 per square foot to $3.27 per square foot.
Lakeville has over 140,000 square feet of office space, in 11 buildings. Average office building
rent within Lakeville ranges from $13.32 to $16.55 per square foot, with an average of $14.27
per square foot, the highest average rent within the Apple Valley study area. Expenses average
$2.13 and taxes average $4.71.
Inver Grove Heights has over 32,000 square feet of office space and Rosemount has one office
building with 13,000 square feet. Rent for office space in the Inver Grove Heights buildings
averages between $10.00 and $14.00 per square foot. Additional data on these two
communities' office inventory was limited. Rosemount has one office building developed in
2009 with net rent of $12.50 per square foot.
Proposed Multi-Tenant Office Buildings
There are seven proposed multi-tenant office buildings with over 940,000 square feet of office
space in the Dakota County study area, as shown in Table 2-4.
Table 2-4
PROPOSED MULTI-TENANT OFFICE BUILDINGS
Square Net
City/Building Feet Rent
Eagan
Waters Ridge Office Center 76,000 $ 17.50
Boulder Lakes Office I 48,478 13.50
Blue Getian Corporate Center 290,000 16.50
Cedar Grove Center 150,000 15.00
Burnsville
Gateway Office Plaza II 100,000 $ 16.00
Mendota Heights
1111 Centre Pointe Blvd 130,000 $ 16.00
Signature Corporate Center 150,000 17.00
Source: Greater MSP , United Properties, Co mmercial Real Es tate Minnesota.
Eagan developers are the most aggressive with four buildings proposed for a total of 564,000
square feet. Mendota Heights has two buildings proposed for a total of 280,000 square feet and
Burnsville has one 100,000 square foot building proposed. Average rent for these buildings is
estimated at about $16.00 per square foot.
MULTI-TENANT OFFICE SHOWROOM
Multi-tenant office showroom space is defined as buildings that typically offer smaller bay sizes
and better than normal finishes and landscaping, typical clear height ceilings are less than 16
feet. Geographic areas for office showroom, office warehouse, and bulk warehouse differ from
those for commercial office space. Competitive cities include: Apple Valley, Burnsville, Eagan,
Farmington, Inver Grove Heights, Lakeville, and Mendota Heights. Regional data includes the
additional cities of Bloomington, Lakeville, Mendota Heights, Oakdale, St. Paul, South St. Paul,
West St. Paul, and Woodbury.
Data for Apple Valley, competitive cities, and the South Airport Region total occupied and
vacant multi-tenant office showroom space for the years 2007 to 2011 is shown in Table 2-5. In
general, multi-tenant office showroom occupied space within all three areas has been declining
over the last four years.
Apple Valley
Total Space 121,165 121,165 121,165 121,165 121,165
Occupied Space 118,813 121,165 121,165 112,723 115,061
Vacant Space 2,352 - 8,442 6,104
Vacancy Rate 1.9 % - % % 7.0 % 5.0 %
Competitive Cities
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Southeast
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Source: United P roperties.
Table 2-5
MULTI-TENANT OFFICE SHOWROOM
TOTAL, OCCUPIED, AND VACANT SPACE; 2007 TO 2011
2007
2,124,705 2,485,946
1,872,210 2,014,958
252,495 470,988
11.9 % 18.9 %
2,736,490 3,147,388
2,454,366 2,638,771
282,124 508,617
10.3 % 16.2 %
2008 2009 2010 2011
Apple Valley office showroom space remained constant at 121,000 square feet between 2007
and 2011. Occupied space for Apple Valley have fluctuated between 2007 and 2011. In 2007,
Apple Valley's multi-tenant office showroom vacancy was 1.9 percent; data indicates that in
2008 and 2009 all office showroom space was occupied; and in 2010 reported vacancy reached
7.0 percent and decreased to 5.0 percent in 2011.
Multi-tenant office showroom space in competitive cities totaled 2.1 million square feet in 2007
and increased to about 2.5 million square feet in 2011, representing an increase of 360,000
square feet. Occupied space in multi-tenant showroom buildings has steadily decreased since
2,485,946
1,931,698
554,248
22.3 %
3,113,618
2,514,893
598,725
19.2 %
2,485,946
1,835,745
650,201
26.2 %
3,168,618
2,468,975
699,643
22.1 %
2,485,980
1,791,427
694,553
27.9 %
3,147,422
2,417,202
730,220
23.2 %
2007. In 2007, 11.9 percent of multi-tenant office showroom space was vacant; steady increases
occurred over the next four years with vacancy reaching 27.9 percent by 2011. In 2011, 694,000
square feet of multi-tenant office showroom space was vacant.
The Southeast Region contained over 2.7 million square feet of multi-tenant office showroom
space in 2007, which increased by over 400,000 square feet to 3.1 million square feet in 2011.
At the same time, vacancy increased from 10.3 percent in 2007 to 23.2 percent in 2011.
Multi-tenant office showroom buildings are shown on Map 2-2 and are described below.
Map 2-2
MULTI-TENANT OFFICE SHOWROOM BUILDINGS
Offlc. Showoam
0 i 2 3 4
Copyright !012 ?1cCcmb Group, Ltd
Apple Valley has three multi-tenant office showroom buildings for a total of 121,165 square feet.
The average rent for office space is $9.08 per square foot and $4.75 per square foot for
warehouse space, as shown in Table 2-6. Total expenses average $4.50 per square foot.
Vacancy within Apple Valley multi-tenant office showroom buildings is currently about nine
percent.
Burnsville has 19 multi-tenant office showroom buildings with a total of 936,641 square feet of
space. The largest multi-tenant office showroom building in Burnsville is about 80,000 square
feet and the smallest is about 20,000 square feet. Office space rent averages $8.93 per square
foot. Warehouse space rents average $5.39 per square foot. Expenses average $2.14 per square
foot, and taxes average $1.92 per square foot. Burnsville has the highest multi-tenant office
showroom vacancy rate of the study area communities at 31.0 percent.
Rent Rate
Table 2-6
MULTI-TENANT OFFICE SHOWROOM BUILDINGS
NET RENT, EXPENSES, AND TAXES
City Office Whse Expenses Taxes Buildings
Apple Valley $ 9.08 $ 4.75 $ 2.38 $ 2.12 3
Burnsville 8.93 5.39 2.14 1.92 19
Eagan 10.12 5.74 1.66 2.18 17
Mendota Heights 9.90 6.75 2.33 2.02 7
Lakeville 6.50 6.50 1
Source: Greater MSP, United Properties, Commercial Real Estate Minnesota
Eagan offers the most multi-tenant office showroom space within the Dakota County study area.
There are 17 multi-tenant office showroom buildings with a total of 1.1 million square feet of
space. Building sizes range from 38,000 square feet to 116,000 square feet. Eagan multi-tenant
office showroom building rent ranges average $10.12 per square foot for office space and $5.74
per square foot for warehouse space. The average office rent at $10.12 per square foot is the
highest rate out of all of the study area communities. Expenses average $1.66 per square foot,
and taxes average $2.18 per square foot. Current vacancy for Eagan's multi-tenant office
showroom buildings is about 25 percent.
Mendota Heights contains seven multi-tenant office showroom buildings, five of which are
located in Mendota Heights Business Park. Mendota Heights Business Park contains 174,000
square feet of space, which is almost two thirds of the total office showroom space within
Mendota Heights. Average office rents for Mendota Heights multi-tenant office showroom
space ranges from $8.50 per square foot to $11.00 per square foot and warehouse space rent
ranges from $4.75 per square foot to $9.90 per square foot. Expenses average $2.33 per square
foot and taxes average $2.02 per square foot. Current multi-tenant office showroom vacancy for
Mendota Heights is 11 percent.
Lakeville has the newest multi-tenant office showroom building within the study area. Air lake
South Creek Business Center was constructed in 2007 and it is the only multi-tenant office
showroom building within Lakeville. This building is about 30,000 square feet and is fully
occupied at this time. Rent for both office and warehouse is $6.50 per square foot. A second,
15,000 square foot Air lake South Creek Business Center building is currently proposed for
Lakeville.
MULTI-TENANT OFFICE WAREHOUSE
Office warehouse space is defined as facilities with 16 to 20 feet clear height ceilings. Multi-
tenant office warehouse space is shown in Table 2-7 for Apple Valley, competitive cities and the
Southeast Region.
Apple Valley multi-tenant office warehouse space has increased by 33,000 square feet from
61,000 square feet in 2007 to 94,600 square feet in 2011. Occupied space in these buildings
increased to 75,136 square feet in 2010 and declined to 69,158 square feet in 2011. The vacancy
rate was 26.9 percent in 2011. Vacant multi - tenant office warehouse space in 2011 was 25,000
square feet.
Apple Valley
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Competitive Cities
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Southeast
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Source: United Properties.
Table 2 -7
MULTI - TENANT OFFICE WAREHOUSE
TOTAL, OCCUPIED, AND VACANT SPACE; 2007 TO 2011
2007
61,594
61,594
6,976,481
6,235,400
741,081
10.6 %
7,779,450
6,945,592
833,858
10.7 %
2008
94,604
72,076
22,528
23.8 %
7,175, 899
6,141,834
1,034,065
14.4 %
8,017,221
6,827,952
1,189,269
14.8 %
2009
94,604
68,983
25,621
27.1 %
2010 2011
94,604
75,136
19,468
20.6 %
94,604
69,158
25,446
26.9 %
7,212,599 7,212,599 7,175,899
6,176,595 6,011,487 5,928,877
1,036,004 1,201,112 1,247,022
14.4 % 16.7 % 17.4 %
8,053,921 8,053,921 7,941,131
6,834,728 6,695,987 6,571,253
1,219,193 1,357,934 1,369,878
15.1 % 16.9 % 17.3 %
Multi - tenant office warehouse space in competitive cities has increased from about 7.0 million
square feet to about 7.2 million square feet, an increase of 200,000 square feet. Between 2008
and 2010, an additional 36,700 square feet was reported; however in 2011, total multi - tenant
office warehouse square feet did not include that additional space. Occupancy for these
buildings has decreased since 2007. The vacancy rate has increased from 10.6 percent to 17.4
percent.
The Southeast Region has seen a slight increase in multi - tenant office warehouse space since
2007, increasing from 7.8 million square feet to 7.9 million square feet in 2011. The peak of
total office warehouse space was in 2009 and 2010, when 8.0 million square feet of office
warehouse space was reported; however in 2011, total space decreased to 7.9 million square feet.
Occupied space in these buildings has steadily decreased since 2007. In 2007, the vacancy rate
was 10.7 percent and increased steadily to 17.3 percent in 2011. Total multi - tenant office
warehouse vacant space was almost 1.4 million square feet in 2011.
The office warehouse category also includes office research, office manufacturers and other
types of similar uses. Office warehouse buildings are shown on Map 2 -3.
Map 2 -3
MULTI - TENANT OFFICE WAREHOUSE BUILDINGS
Rent Rate
Apple Valley has three multi - tenant office warehouse properties totaling over 94,000 square feet.
The average office rent for these buildings is $9.13 per square foot and warehouse rent average is
$7.13 per square foot, as shown in Table 2 -8. Expenses average $1.49 per square foot and taxes
average $1.99 per square foot. Total vacancy for these buildings is estimated at 27 percent.
Table 2 -8
MULTI - TENANT OFFICE WAREHOUSE BUILDINGS
NET RENT, EXPENSES, AND TAXES
City Office Whse Expenses Taxes Buildings
Apple Valley $ 9.13 $ 7.13 $ 1.49 $ 1.99 3
Burnsville 8.07 4.59 1.39 1.76 39
Eagan 8.46 4.45 1.25 1.72 51
Mendota Heights 9.45 4.50 1.54 1.45 5
Lakeville 7.84 4.89 1.22 1 5
Inver Grove Heights 8.25 4.25 0.77 1.08 2
Source: Greater MSP, United Properties, Commercial Real Estate Minnesota
Burnsville has 39 multi - tenant office warehouse buildings with a total of 1.7 million square feet.
These office warehouse buildings range in size from 36,000 square feet to 118,000 square feet,
with the average being 45,000 square feet. Office rents average $8.07 per square foot and
warehouse rents average $4.59 per square foot. Expenses average $1.39 per square foot and
taxes average $1.76 per square foot. Average vacancy in Burnsville for office warehouse space
is about 16 percent.
Eagan has the largest total square footage of multi-tenant office warehouse space within the
Dakota County study area, with 51 buildings and over 4.4 million square feet. There are two
large business parks that contain almost 20 percent of the total square footage for Eagan:
Corporate Square at 532,860 total square feet and Armstrong Business Center at 308,557 square
feet. In total, 30 percent of the multi-tenant office warehouse buildings in Eagan are larger than
100,000 square feet. These 15 buildings represent 2.3 million square feet, or over 50.0 percent
of Eagan's total multi-tenant office warehouse square footage. Average rent for office space is
$8.46 per square foot and an average of $4.59 per square foot for warehouse space. Expenses
average $1.25 per square foot and taxes average $1.72 per square foot. Overall office warehouse
vacancy in Eagan is approximately 11 percent.
Mendota Heights has five multi-tenant office warehouse buildings ranging in size from 48,000 to
150,000 square feet. Average office rent for these buildings is $9.45 per square foot and $4.50
per square foot for warehouse space. Expenses average $1.54 per square foot and taxes average
$1.45 per square foot. The current vacancy rate is 11 percent in Mendota Heights.
Lakeville contains over 179,000 square feet of multi-tenant office warehouse space in five
buildings ranging in size from 12,960 to 93,210 square feet. Average office rent is $7.84 per
square foot, while warehouse rent averages $4.89 per square foot. Expenses average $1.22 per
square foot and taxes average $1.29 per square foot. According to available data, the vacancy
rate for multi-tenant office warehouse space is currently at 2.0 percent, the lowest of all the study
area communities.
Inver Grove Heights has two multi-tenant office warehouse buildings: St. Paul Industrial
Properties #16 and #17. In total, these two buildings contain over 124,000 square feet of office
warehouse space. Average office rent is $8.25 per square foot and warehouse average rent is
$4.25 per square foot with average expenses of $0.77 per square foot and taxes of $1.08 per
square foot. Current office warehouse vacancy is 21 percent in Inver Grove Heights.
MULTI-TENANT BULK WAREHOUSE
Bulk warehouse is defined as facilities that have 21 foot or more clear height ceilings and are
generally located near major transportation corridors. Multi-tenant bulk warehouse buildings are
shown in Table 2-9. While Apple Valley does not have any bulk warehouse buildings, the state
of the market in competitive cities is indicative of market conditions. Total multi-tenant bulk
warehouse space declined in both the competitive cities and the Southeast Region between 2008
and 2011. The decline in competitive cities was almost 900,000 square feet or 18 percent.
Vacancy rates increased between 2007 and 2010 and declined in 2011, only because total space
declined.
Competitive cities had a total of 4.6 million square feet of multi-tenant bulk warehouse space in
2007 and peaked with 4.8 million square feet in 2008, however in 2009, bulk warehouse space
decreased to 4.4 million and further decreased to 3.9 million in 2011. Bulk warehouse vacancy
for these cities also decreased between 2007 and 2011. Bulk warehouse vacancy was 13.4
percent in 2007 and increased to a high of 17.5 percent in 2010; however, in 2011 it decreased to
10.5 percent. Total vacant bulk warehouse space in 2011 was 417,000 square feet.
Competitive Cities
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Southeast
Total Space
Occupied Space
Vacant Space
Vacancy Rate
Source: United Properties.
Copyright 2012 Iv cCornb Group, Ltd.
2007
Table 2-9
MULTI-TENANT BULK WAREHOUSE
TOTAL, OCCUPIED, AND VACANT SPACE; 2007 TO 2011
2008 2009
2010 2011
4,604,037 4,832,037 4,418,798 4,418,798 3,953,367
3,986,555 4,016,549 3,661,086 3,646,786 3,538,548
617,482 817,488 759,712 774,012 416,819
13.4 % 16.9 % 17.2 % 17.5 % 10.5 %
5,362,990 5,592,990 5,179,751 5,179,751 4,714,320
4,735,508 4,759,537 4,404,074 4,389,774 4,218,118
627,482 833,453 775,677 789,977 496,202
11.7 % 14.9 % 14.9 % 15.3 % 10.5 %
Southeast Region had a total of 5.4 million square feet of bulk warehouse space in 2007, which
increased to 5.6 million in 2008; however, bulk warehouse space declined to 4.7 million square
feet by 2011. Bulk warehouse vacancy rates fluctuated between 11.7 percent in 2007 to 15.3
percent in 2010 to 10.5 percent in 2011.
Bulk warehouse space totaled 4.74 million square feet in the Dakota County study area in 2011.
Bulk warehouse buildings are shown on Map 2-4
Map 2-4
MULTI-TENANT BULK WAREHOUSE BUILDINGS
.41•111111111"
WarehOuse
0 t 2 3 4
34414, ntiltm
,
05/30112
Table 2 -10
BULK WAREHOUSE BUILDINGS
NET RENT, EXPENSES, AND TAXES
Rent Rate
City Office Whs e Expenses Taxes Buildings
Burnsville $ 6.86 $ 3.94 $ 1.48 $ 1.46 5
Eagan 6.85 4.38 0.92 L47 18
Inver Grove Heights 7.95 1.29 0.51 2
Lakeville 3.75 3.75 0.68 0.71 2
Mendota Heights 8.63 4.13 0.72 0.98 2
Farmington 4.00 2.50 0.50 0.93 1
Source: Greater MSP, United Properties, Commercial Real Estate Minnesota
Burnsville contains five multi - tenant bulk warehouse buildings for a total of 744,311 square feet
of space. Building size ranges from 31,000 square feet to 413,000 square feet. Rent for office
space averages $6.86 per square foot and warehouse space rent averages $3.94 per square foot.
Expenses for these buildings average $1.48 per square foot and taxes average $1.46 per square
foot. Burnsville's largest bulk warehouse contains 413,000 square feet and is currently vacant,
which drives Burnsville's vacancy rate to 62 percent.
Eagan has the largest inventory of bulk warehouse space with 18 bulk warehouse buildings that
total 2,316,543 square feet. Five of the 18 buildings, or one - quarter, contain over 200,000 square
feet. These five buildings represent over one -half of the total bulk warehouse space for Eagan.
Average rent for Eagan's bulk warehouse buildings is $6.85 per square foot for office space and
$4.38 per square foot for warehouse space. Expenses average $0.92 per square foot and taxes
average $1.47 per square foot. Estimated bulk warehouse vacancy in Eagan is 13 percent, one of
the lowest vacancy rates for the Dakota County study area.
Mendota Heights, with two large bulk warehouse buildings, contains the second largest multi-
tenant bulk warehouse space inventory within study area communities. In total, Mendota
Heights has 575,000 square feet of bulk warehouse space. Office rent averages $8.63 per square
foot and warehouse space rent averages $4.13 per square foot. Expenses average $0.72 per
square foot and taxes for both buildings are $0.98 per square foot. Current vacancy for Mendota
Heights bulk warehouse buildings is about 19 percent.
Inver Grove Heights has two bulk warehouse buildings that total 556,542 square feet. The
buildings range in size from 174,180 square feet to 3 82,3 62 square feet. Rent information was
available for one of the buildings, office rent for this building was $7.95 per square foot,
warehouse rent was not available. Available data shows expenses at $1.29 per square foot and
taxes at $0.51 per square foot. Current vacancy is 52 percent driven by an 84 percent vacancy in
one building.
Lakeville has two large bulk warehouse buildings totaling over 400,000 square feet. Rent data
was available for one building, which indicated that office rent and warehouse rent was $3.75 per
square foot with expenses of $0.68 per square foot and taxes of $0.71 per square foot. Both of
these bulk warehouse buildings are currently fully occupied.
2 -12
Farmington has approximately 145,000 square feet of bulk warehouse space in two buildings.
Rental and expense data available for one of the buildings indicates that office rent is $4.00 per
square foot and warehouse rent is $2.50 per square foot. Expenses are estimated at $0.50 per
square foot and taxes were $0.93 per square foot. Current bulk warehouse vacancy in
Farmington is about 44 percent.
VACANT LAND
The Hanson Site is one of the largest, but not the largest, vacant property offered for sale in
Dakota County. There are, however, three larger parcels that are currently offered for sale: two
in Lakeville and one in Farmington, which is not included in the competitive cities. In fall of
2011, there were 128 vacant parcels offered for sale. Eighty-two of these parcels were less than
10 acres in size. Forty-one parcels were larger than 10 acres in size and could accommodate
large users that would consider the Hanson Site.
Vacant parcels larger than 10 acres offered for sale are contained in Table 2-11 and shown on
Map 2-5. The Hanson Site appears to be offered as two parcels of 60 and 20 acres. The larger
parcel is offered at $2.00 per square foot and the smaller is offered at $4.75 per square foot. A
200-acre parcel in Lakeville is offered at $2.50 per square foot. Five other parcels in Apple
Valley are offered for sale ranging in size from 10 to 21 acres at prices ranging from $3.00 per
square foot to $8.50 per square foot.
Map 2-5
VACANT INDUSTRIAL AND BUSINESS PARK LAND FOR SALE
0 Copyright
12 McComb Group, Ltd
2-13
02/22/12
Table 2-11
VACANT LAND: APPLE VALLEY AND COMPETITIVE CITIES
Property Asking Price Acres $ P/SF
APPI E VALLEY
1 Hanson Concrete $6,969,600 60.0 $ 2.00
2 Northstar Concrete Co 4,138,200 20.0 4.75
3 Apple Valley Golf Course Neg. 21.9 NA
4 Eagle Rdg Bus Prk/Patina 2,442,408 4,477,748 18.7 3.00
5 Cobblestone Lake 4,480,146 12.1 8.50
6 145th St W 2,024,800 10.9 4.25
7 Fischer M arketp lace Neg. 10.0 NA
Subtotal 153.6
BURNS VILLE
8 12200 River Ridge Blvd $8,700,000
EAGAN
9 NW of Yankee Doodle & I-35E Neg. 24.6 NA
10 1501-1545 Yankee Doodle Rd $8,300,000 23.9 $ 7.97
11 S. Robert Trail & Diffley Rd. 3,920,400 20.0 4.50
12 1501 Yankee Doodle Rd 4,181,760 12.0 8.00
Subtotal 80.5
INVER GROVE HEIGHTS
13 NE of 70th St E & S Robert Trail $2,010,000 39.6 $ 1.17
14 8011 Courthouse Blvd 599,000 32.5 0.42
15 Hoovestol Parcels I & II 1,592,118 - 2,634,513 34.4 1.06 - 1.76
16 Robert Corners 3,920,400 20.0 4.50
17 2574 90th St E 699,900 19.4 0.83
18 Diffley Rd & S Robert Trail 3,267,000 15.0 5.00
19 SE of Yankee Doodle Rd & Argenta Trl 775,000 9.3 1.92
Subtotal 170.1
RO S EMO UN T
20 Rosemount Business Park $9,801,000 - $11,979,000 50.0 $4.50 - $5.50
21 JJT Business Park 5,869,710 35.0 3.85
22 13273 Pine Bend Trail Neg. 26.3 NA
23 Endres Processing Land 2,532,358 16.6 3.50
24 NW of Co Rd 46 and Biscayne Ave 2,286,900 15.3 3.43
25 NW of CR 42 & Biscayne 1,350,000 14.9 2.08
27 Doyle Path E & Hwy 55 420,000 13.2 0.73
Subtotal 171.4
MEND 0 TA HEIGHTS
27 0 Commerce Drive Neg. 10.3 NA
LAKEVILLE
28 Airlake Industrial Park $21,780,000 200.0 $ 2.50
29 1-35 & 205th St Neg. 132.6 NA
30 First Park Lakeville Neg. 50.0 NA
31 Airlake Station 11,434,500 42.0 6.25
32 Lakeville Commerce Center 1,646,565 41.3 0.91
33 18950 Kenwood Trail 2,500,000 37.7 1.52
34 SE of Hwy 70 & Highview Ave 3,857,000 25.0 3.54
35 Jurel Way & Kenwood Trail 1,750,000 17.7 2.27
36 NW of Dodd Rd & Cedar Ave 5,401,440 15.5 8.00
37 Lakeville Land Site 3 3,273,100 15.0 5.00
38 SEQ 190th St & Dodd Rd 700,000 12.4 1.30
39 7900 Lakeville Blvd 1,845,200 10.6 4.00
40 Kenwood Trail N of 185th 699,000 10.1 1.59
Subtotal 609.9
Total 1,224.7
Sources: M NCA R, Loopnet, Greater M SP and Showcase.
2-14
28.8 S 6.93
Eagan had four parcels ranging in size from 12 to 24.6 acres offered at prices ranging from $4.50
to $8.00 per square foot. Three of the Eagan sites are well located in the vicinity of I-35E and
Yankee Doodle Road. Inver Grove Heights had seven parcels ranging in size from 9.3 to 39.6
acres with prices ranged from $0.42 to $5.00 per square foot. Five of the parcels are offered at
less than $2.00 per square foot. Rosemount has seven parcels offered for sale ranging in size
from 13.2 to 50 acres at prices of $0.73 to $5.50 per square foot. Three parcels are in the vicinity
of CSAH 42 and TH-3 and three others are in the Pine Bend area. Site 21 is listed as
retail/general with no nearby residential. Lakeville has 13 parcels ranging in size from 10 to 200
acres with offering prices of $0.91 to $8.00 per square foot. Five sites are in the vicinity of
Air lake Industrial Park and three are near 1-35.
There are numerous parcels of well located land available along limited access freeways in
Dakota County that will be more attractive to businesses that desire convenient truck access.
The Apple Valley sites along CSAH 42 are more convenient than sites located in Central
Lakeville, Inver Grove Heights, and Rosemount.
MEDICAL OFFICE BUILDINGS
Apple Valley has 13 medical office buildings, 12 of which are single tenant and one--Apple
Valley Professional Building--is multi-tenant. This building is competitive with other Dakota
County multi-tenant medical buildings. Medical office buildings are shown on Map 2-6.
Map 2-6
MEDICAL OFFICE BUILDINGS
Office Modital
Propmd Office Medal
Ort
r.
9/13
Copyright 2013 McComb Group, Ltd, 01
2-15
Apple Valley Medical Office Buildings
Apple Valley medical office buildings total over 220,000 square feet, as shown in Table 2-12.
Most of these are smaller professional buildings under 10,000 square feet. Only three are
significant relative to potential business park demand for Apple Valley. These are Health
Partners Medical/Dental, Fairview Cedar Ridge Clinic, and Apple Valley Medical Center. These
three buildings, with 40,000 square feet to 60,000 square feet, represent over 70 percent of the
total medical office facilities in Apple Valley.
Source: United P roperties.
APPLE VALLEY MEDICAL OFFICE BUILDINGS
Building
Table 2-12
Apple Valley Professional Building 1974 13,120
Dakota Pediatric Clinic 1974 2,731
Advanced Chiropractic 1979 4,561
Health Partners Med/Dent Clinic 1981 41,713
Apple Valley M edical Center 1986 61,634
Biewald Orthodontics 1990 7,917
Fairview Cedar Ridge Clinic 1994 55,836
M edical/Dental Office 1996 2,428
Brite Smiles Dental 1997 3,734
Shelley Wakefield DDS 1998 5,463
Bakken Professional Building 2000 9,465
Dalseth Dental 2001 5,375
Apple Valley Eye Clinic 2003 6,720
Total 220,697
So urce: Dakota County. Co Star Gro up, Inc ., Mncar, and McComb Gro up, Ltd.
Multi-Tenant Medical Office Buildings
Occupied space in multi-tenant medical office buildings in competitive cities has increased
modestly; while vacancy rates declined from 13.9 percent in 2007 to 9.6 percent in 2011. In the
Southeast Region, occupied space in multi-tenant medical office buildings increased by 97,500
square feet, while the vacancy rate decline from 15.2 percent to 13.3 percent between 2007 and
2011. While this performance is low, it is better than any other business park category in the
submarket.
Apple Valley
Total Sp ace 13,120
Competitive Cities
Total Sp ace 441,088
Occupied Space 379,714
Vacant Space 61,374
Vacancy Rate 13.9 %
Southeast
Total Sp ace 1,530,245
Occupied Sp ace 1,297,821
Vacant Space 232,424
Vacancy Rate 15.2 %
Table 2-13
MULTI-TENANT MEDICAL OFFICE
TOTAL, OCCUPIED, AND VACANT SPACE; 2007 TO 2011
2007 2008 2009 2010 2011
13,120 13,120
422,819
361,901
60,918
14.4 %
1,561,342
1,335,709
225,633
14.5 %
2-16
Year Square
Opened Feet
455,619
390,864
64,755
14.2 %
1,609,061
1,372,541
236,520
14.7 %
13,120 13,120
455,619
405,351
50,268
11.0 %
1,609,061
1,393,700
215,361
13.4 %
455,619
411,814
43,805
9.6 %
1,609,061
1,395,352
213,709
13.3 %
Apple Valley Professional Building net rent is approximately $20.00 per square foot with
expenses and taxes totaling $9.00 per square foot.
Burnsville provides over 90,000 square feet of multi-tenant medical office space in two
buildings, Oak Ridge East Professional Building and Ridgepoint Medical, as shown in Table 2-
14. Rent for Ridgepoint Medical ranges from $16.00 per square foot to $17.00 per square foot
with expenses of $8.68 per square foot and taxes of $4.63 per square foot. This building has a
vacancy rate of almost 30 percent, while Oak Ridge East Professional's vacancy rate is 5.3
percent.
MULTI-TENANT MEDICAL OFFICE BUILDINGS
Name
APPLF, VALLEY
Apple Valley Professional Building
BURNSVILLE
Oak Ridge East Professional Bldg
Ridgepoint M edical
Subtotal
EAGAN
1215 Town Centre Dr
Town Centre Plaza
1121 Town Centre
Subtotal
LAKEVII 411:
Cedar Ave Prof Building
Lakeville Professional Plaza
Subtotal
Table 2-14
Total
Sq. Ft.
13,120
52,391
38,199
90,590
32,800
44,383
18,900
96,083
25,000
16,000
41,000
INVER GROVE HEIGHTS
Inver Grove Heights Prof Building 53,500
TOTAL 294,293
Source: Greater MSP , United P ro perties , Co mmercialRealEs tate Minnesota
Eagan has the most multi-tenant medical office buildings within the Dakota County study area
with three buildings totaling over 96,000 square feet. These buildings range in size from 18,900
to 44,383 square feet and are all located in the same area on Town Center Drive. Average rent is
about $15.25 per square foot with expenses ranging from $2.74 per square foot to $3.91 per
square foot and taxes ranging from $2.79 per square foot to $4.80 per square foot.
Lakeville has two multi-tenant medical office buildings for a total of 41,000 square feet. Rent
for each of these buildings is $16.00 per square foot. Both of these buildings were built in the
early 2000's. Vacancy in 2011 was 18.6 percent for the Cedar Avenue building and 23.7 percent
for Lakeville Professional Plaza.
2-17
Inver Grove Heights has one multi-tenant medical office building, a 53,500 square foot building
with rent of $18.50 per square foot, expenses of $4.34 per square foot, and taxes of $3.10 per
square foot. Vacancy in 2011 was 34.4 percent.
Proposed Multi-Tenant Medical Office Space
There are three proposed multi-tenant medical office buildings within the Dakota County study
area: a 45,000 square foot building in Lakeville, 24,000 square feet in Mendota Heights, and
9,700 square feet in Rosemount. Estimated rent ranges from $19.50 per square foot to 22.50 per
square foot.
PROPOSED MULTI-TENANT MEDICAL OFFICE BUILDINGS
LAKEVILLE
Lakeville Medical Office
Name
MEND° TA HEIGHTS
Mendota Hts Specialty Care Cntr
Table 2-15
Total
Sq. Ft.
24,000
45,000
RO S EMO UN T
Rosemount Village Medical Office 9,700
Source: GreaterMSP , United P roperties,CommercialRealEstate Minnesota
2-18
Chapter III
EMPLOYMENT AND ECONOMIC BASE
The demand for business park development is related to employment growth in those business
categories that typically occupy office, office showroom, and office warehouse buildings. This
chapter addresses employment trends in Apple Valley and Dakota County and the types of
businesses that choose to locate in Apple Valley.
Employment by Industry
Compared to the nation, the seven-county metropolitan area has a high concentration of
corporate headquarters companies. This sector, described as the Management of Companies and
Enterprises in Figure 3-1, is also relatively large compared with other sectors in the Twin Cities
metro, and it demonstrated competitive growth compared to the nation — growing nearly 100
percent faster than similar types of companies during the period 2005 to 2010. The Computer
and Electronic Product Manufacturing sector, another large and highly concentrated sector in the
Twin Cities metro area grew much more slowly than other firms in this sector nationally during
this same time period. Other industry sectors in the Twin Cities that are highly concentrated
compared to the nation grew at a rate close to the national average.
Figure 3-1
t Computer and Electronic
E
E
w
Employment Size, Growth and Concentration for the Top Ten Industries
According to Employment Concentration, Twin Cities
3.6
Product Mfg
Fabricated Metal Product
Manufacturing
1. National employment concentration
-200% -150% -100% -60% 0% 60%
Competitive Growth 2006-2010
Quarterly Census of Employment and Wages 2005-2010
ISPs, Search Portals, &
Data Processing
Lessors, Nonfinancial
Intangible Assets 3.0
Miscellaneous
Manufacturing
Mr Transportation
Publishing Industries
Fina cial Investment &
Related Activity
100%
150°A
Figure 3-2 reveals that two of the 10 most highly concentrated industry groups in the seven-
county metro also show up as significant in Dakota County — Computer and Electronic Product
Manufacturing, and Publishing Industries. The Publishing Industry segment is nearly seven
times (6.71 percent) more concentrated in Dakota County than it is in the nation and it
demonstrated stronger growth than the nation during the 2005 to 2010 timeframe (24 percent).
Average employment in the sector employer was 6,796 in 2010. Thomson Rueters/West, located
in Eagan, is a significant employer in this industry group.
Employment in the Computer and Electronic Product Manufacturing averaged 2,991 in Dakota
County in 2011, but employment in this sector is not located in Apple Valley. Three other strong
segments in Dakota County — Truck Transportation and Wholesalers (Durable and Non-Durable)
are concentrated in areas with access to the interstate system.
Figure 3-2
0
0
Credit Inter_
R alated
-3C
Employment Size, Growth and Concentration for the Top Ten Industries
According to Size, Dakota County - 2005-2010
Nursing and ResIdenlla
Computer and Electronic Care Facilities
Product Mfg
-200%
Professional and
Specialty Trad
Contractors
stiles
Truck Transportation
Merchant Wholesalers,
Nondurable Goods
Merchant Wholesalers,
Durable Goods
100%
30
Technical Services
Comperdve Growth 2005-2010
Economic Development Services, Inc./Quarterly Census of Employment and Wages, 2005-2010
re,
Two large industry segments in Dakota County that are less dependent on the interstate system,
Professional and Technical Services with an average annual employment of 7,821 in 2010 and
Ambulatory Health Care Services with average annual employment of 6,720 in 2010, are also
shown in Figure 3-2.
Figure 3-3 reveals that the wage rate in Professional, Technical, and Managerial Services in 2010
is one of the highest in the county. In fact it averaged $75,608. Another sector less dependent
upon good interstate access, Ambulatory Health Care Services had an average wage of $50,128
in 2010, as shown in Figure 3-3.
Figure 3-3
GO
0
ce
5
Nursing a
Care
$10,000 $20,000
Ambulatory Health
Care Services
Employment Size, Concentration and Wages for the Top Ten Industries
According to Size, Dakota County 2010
d Residential
acilities
Average Annual Wage
Merchant Wholesalers,
Durable Goods
Truck Transportation
Specialty Trade
Contractors
Economic Development Services, Inc./Quarterly Census of Employment and Wages, 2010
Insurance Carriers &
Related Activities
Merchant Wholesalers,
Professional & Nondurable Goods
Technical Service
. $60,000 $70, ,0 $90,000
Employment by industry in Apple Valley, Dakota County, and the Eleven-County Minneapolis-
St. Paul Metropolitan Statistical Area (MSA) is shown in Table 3-1 for 2010. Apple Valley
employment was 13,714 in 2010 or 0.89 percent of the MSA employment and 8.16 percent of
Dakota County's employment. This table highlights in yellow those business categories where
Apple Valley's share of employment is above that of the MSA and Dakota County. For
example, Retail Trade employment in Apple Valley is 2.22 percent of the MSA employees in
that category, two and one-half times the rate for all employees. Apple Valley Retail Trade
employment is also double the percentage for Dakota County's total employment. This is not
unexpected given the large retail concentration that exists in Apple Valley. The other categories
where Apple Valley's proportion of employment is above the MSA and Dakota County include
Educational Services; Arts, Entertainment, and Recreation; Accommodation and Food Services;
Other Services; and Public Administration. Health Care and Social Assistance employment is
about 25 percent below the MSA percentage, but similar to the Dakota County percentage.
Areas where Apple Valley employment is below the MSA and Dakota County averages include
Information, Finance and Insurance, Management of Companies and Enterprises, and
Administrative.
Industry
Total, All Industries 13,714 168,087 1,532,801 0.89 % 8.16
Manufacturing 530 17,728 156,470 0.34 2.99
Wholesale Trade 154 9,085 74,988 0.21 1.70
Retail Trade 3,384 20,897 152,728 2.22 16.19
Transportation and Warehousing 93 13,035 60,496 0.15 0.71
Information 190 8,476 40,816 0.47 2.24
Finance and Insurance 600 9,564 103,190 0.58 6.27
Real Estate and Rental and Leasing 222 2,890 27,579 0.80 7.68
Professional and Technical Services 378 7,894 95,972 0.39 4.79
Management of Companies and Enterprises 35 2,622 62,461 0.06 1.33
Administrative 202 6,830 89,678 0.23 2.96
Educational Services 2,633 14,047 125,174 2.10 18.74
Health Care and Social Assistance 1,472 17,651 216,331 0.68 8.34
Arts, Entertainment, and Recreation 507 2,726 27,854 1.82 18.60
Accommodation and Food Services 1,771 13,726 120,326 1.47 12.90
Other Services, Ex. Public Admin 473 NA 52,136 0.91 NA
Public Administration 785 5,323 67,409 1.16 14.75
Source: M innesota Department of Employment and Economic Development.
2007 Census of Business
Table 3-1
EMPLOYMENT BY INDUSTRY; 2010
APPLE VALLEY, DAKOTA COUNTY, AND MSA
Apple Dakota % of % of
Valley County MSA MSA Dakota Co
Apple Valley business establishments identified in the 2007 Census of Business are contained in
Table 3-2. This table contains number of establishments, sales, payroll, and paid employees for
the pay period including March 12, 2007. The largest employment categories are Ambulatory
Health Care Services and Manufacturing. Businesses that would typically occupy business park
type buildings are highlighted in yellow and demonstrate the diversity of Apple Valley's
business base. Professional, Scientific, and Technical Services is the largest category with 156
establishments. Legal Services include 12 legal offices and six Other Legal Services with a total
of 95 employees. Architectural, Engineering, and Related Services are represented by 10
establishments. Computer System Design and Related Services has 55 establishments. Custom
Computer Programming Services has 34 establishments and 15 establishments providing
Computer System Design Services. Management, Scientific and Technical Consulting Services
includes 32 establishments with 28 of those firms engaged in Management Consulting Services.
Advertising, Public Relations, and Related Services account for 10 establishments.
Administrative and Support is represented by 45 establishments with 41 of those offering
Administrative and Support Services. Seven establishments offer Business Support Services.
Ambulatory Health Care Services is a significant category with 72 establishments including
Offices of Physicians, Dentists, Other Health Practitioners, Chiropractors, and Mental Health
Practitioners.
The 2007 Census of Business demonstrates that Apple Valley has important clusters of
establishments in Manufacturing, Professional and Management Services, and Ambulatory
Health Care.
Apple Valley
31-33 Manufacturing 16 D $27,556 551
42 Wholesale trade 33 $106,513 8,025 170
423 Merchant wholesalers, durable goods 18 27,786 3,524 78
424 Merchant wholesalers, nondurable goods 15 78,727 4,501 92
54 Professional, scientific, and technical services 156 D I) e
5411 Legal services 18 12,101 5,298 95
54111 Offices of lavvy ers 12 7,972 4,361 72
54119 Other legal services 6 4,129 937 23
5412 Accounting, tax preparation, bookkeeping, and payroll services 15 3,410 1,236 62
5413 Architectural, engineering, and related services 10 D D b
5415 Computer systems design and related services 53 21,895 8,097 113
541511 Custom computer programming services 34 10,222 4,045 69
541512 Computer systems design services 15 D D b
5416 Management, scientific, and teclmical consulting services 32 8,252 2,854 66
54161 M anagement consulting services 28 7,456 2,570 61
5418 Advertising, public relations, and related services 10 7,139 1,880 32
54194 Veterinary services 4 5,932 2,598 80
56 Administrative and support 45 19,772 7,277 291
561 Administrative and support services 41 D D e
5614 Business support services 7 D D b
621 Ambulatory health care services 72 98,306 33,375 786
6211 Offices of physicians 10 30,577 11,946 326
621111 Offices of phy sicians (except mental health specialists) 8 D D e
6212 Offices of dentists 26 44,286 13,766 232
6213 Offices of other health practitioners 28 10,494 3,306 95
62131 Offices of chiropractors 17 3,079 852 36
62133 Offices of mental health practitioners (except physicians) 6 2,731 823 21
Source: U.S.Census Bureau.
Table 3-2
APPLE VALLEY ESTABLISHMENTS, SALES, PAYROLL AND EMPLOYEES
2007 CENSUS OF BUSINESS
Number of p aid
Annual employees for p ay
Sales Pay roll period including
Industry # Est ($1,000) ($1,000) March 12
Employment Profile
Worker age and earnings in Apple Valley differ from Dakota County and the MSA, as shown in
Table 3-3. Apple Valley has a higher proportion of workers 29 or younger (28.7 percent) and a
lower proportion of workers age 30 to 54 (52.4 percent). Workers age 55 or older (18.8 percent)
are slightly higher than Dakota County or the MSA.
The difference between Apple Valley and Dakota County and the MSA is even greater in job
earnings. Jobs paying $1,250 or less represent 35.4 percent of Apple Valley jobs compared to
25.0 percent in Dakota County and 23.8 percent in the MSA. Jobs earning in the middle
category ($1,251 to $3,333 per month) are similar in all three areas. Jobs paying $3,333 or more
per month are 33.5 percent of Apple Valley jobs compared to 43.4 percent in Dakota County and
46.0 percent in the MSA. The proportion of Dakota County jobs paying $3,333 per month or
more is 30 percent higher than Apple Valley. This is a reflection of Apple Valley's high
concentration of employment in retail trade as well as the MSA's strength in corporate
headquarters facilities.
Total All Jobs
WORKER PROFILE: AGE AND EARNINGS; 2010
APPLE VALLEY, DAKOTA COUNTY, AND MSA
Apple Valley
Table 3-3
Number Percent Number Percent Number Percent
13,644 100.0 % 167,433 100.0 % 1,668,911 100.0 %
Jobs by Worker Age
Age 29 or younger 3,922 28.7 % 42,088 25.1 % 413,777 24.8 %
Age 30 to 54 7,153 52.4 96,823 57.8 965,514 57.9
Age 55 or older 2,569 18.8 28,522 17.0 289,620 17.4
Jobs by Earnings
$1,250 per month or less 4,827 35.4 % 41,928 25.0 % 397,624 23.8 %
$1,251 to $3,333 per month 4,250 31.1 52,766 31.5 502,779 30.1
More than $3,333 per month 4,567 33.5 72,739 43.4 768,508 46.0
Source: U.S. Census Bureau.
Employment Inflow and Outflow
Labor inflow and outflow, shown in Table 3-4, reports the number of workers who commute into
and out of Apple Valley and Dakota County and those that live and work in each area. This data
was compiled by the United States Census Bureau for 2009.
Source: U.S. Census Bureau.
Table 3-4
LABOR INFLOW AND OUTFLOW; 2009
APPT ,F, VALLEY AND DAKOTA COUNTY
Dakota County MSA
Apple Valley Dakota County
Characteristic Number Percent Number Percent
Labor Force Inflow and Outflow
Living in the City/County 26,849 100.0% 210,811 100.0%
Living and Employed in the City/County 3,094 11.5% 77,711 36.9%
Living in the City/County but Employed Outside 23,755 88.5% 133,100 63.1%
Employment Inflow and Outflow
Employed in the City/County 13,683 100.0% 164,524 100.0%
Employed and Living in the City/County 3,094 22.6% 77,711 47.2%
Employed in the City/County but Living Outside 10,589 77.4% 86,813 52.8%
Labor force inflow and outflow identifies work location based on employee's home location.
Only 11.5 percent of the Apple Valley labor force both live and work in the city. Dakota
County, on the other hand due to its size, has more residents (36.9 percent) that both work and
live in Dakota County.
Employment inflow and outflow identifies the number of employees that both live and work in
Apple Valley and Dakota County and the number that work in Apple Valley or Dakota County
and those that live outside these areas. Apple Valley has 13,683 people that are employed, 22.6
percent of them live and work within Apple Valley; while the remainder (77.4 percent) work in
Apple Valley and live outside of the city. In Dakota County, almost half of the employees (47.2
percent) live and work within the county and the others work in Dakota County and live outside
of the county.
A large portion of Apple Valley residents (88.5 percent) commute to jobs outside the city; while
77.4 percent of the Apple Valley employees live outside the city.
Demographic Characteristics
Labor inflow and outflow are also shown by demographic characteristic for both Apple Valley
and Dakota County in Table 3-5. This data breaks down the outflow, inflow, and interior jobs by
age, income, and industry.
Interior jobs represent employees that both live and work in either Apple Valley or Dakota
County. Interior Apple Valley residents employed in the city:
O Tend to be younger and older than those in Dakota County.
• Earn less money with 42.4 percent of the employees earning $1,250 per month or less
compared to 28.9 percent in Dakota County. Apple Valley has a smaller proportion
of employed residents earning $3,333 per month than Dakota County 27.9 percent
and 39.6 percent, respectively.
• Hold jobs in service industries, 70.9 percent compared to 64.2 percent in Dakota
County. Goods producing employment in Apple Valley is 3.6 percent compared to
14.3 percent in Dakota County.
Outflow jobs represent residents of Apple Valley or Dakota County that are employed outside
those areas. Significant findings include:
O The age distribution of outflow jobs is similar for Apple Valley and Dakota County.
• The distribution of worker earnings is similar for Apple Valley and Dakota County.
• The distribution of workers by industry is generally similar in Apple Valley and
Dakota County.
Inflow jobs represent workers that live somewhere else, but work in either Apple Valley or
Dakota County. Significant findings include:
• Apple Valley (30.0 percent) has a larger proportion of workers age 29 or under than
Dakota County (25.8 percent).
• Apple Valley has a higher proportion of lower paid inflow workers than Dakota
County. Workers in the $1,250 per month or less and the $1,251 to $3,333 per month
categories totaled 76.2 percent compared to 51.6 percent in Dakota County.
• Apple Valley has fewer inflow workers employed in goods producing industries than
Dakota County. Almost three-quarters (71.8 percent) of Apple Valley inflow workers
are employed in the all other services categories compared to 56.2 percent in Dakota
County.
Job Characteristic
Table 3-5
LABOR INFLOW AND OUTFLOW; 2009
APPT E VALLEY AND DAKOTA COUNTY
BY AGE, INCOME, AND INDUSTRY
By Age
Workers Aged 29 or younger
Outflow 5,649 23.8% 32,538 24.4%
Inflow 3,176 30.0% 22,423 25.8%
Interior 846 27.3% 20,095 25.9%
Workers Aged 30 to 54
Outflow 13,949 58.7% 79,764 59.9%
Inflow 5,610 53.0% 51,061 58.8%
Interior 1,606 51.9% 44,087 56.7%
Workers Aged 55 or older
Outflow 4,157 17.5% 20,798 15.6%
Inflow 1,803 17.0% 13,329 15.4%
Interior 642 20.7% 13,529 17.4%
By Income
Workers Earning $1,250 per month or less
Outflow 5,203 21.9% 28,332 21.3%
Inflow 3,576 33.8% 19,724 22.7%
Interior 1,311 42.4% 22,440 28.9%
Workers Earning $1,251 to $3,333 per month
Outflow 6,651 28.0% 36,349 27.3%
Inflow 1,311 42.4% 22,440 28.9%
Interior 919 29.7% 24,486 31.5%
Workers Earning More than $3,333 per month
Outflow 11,901 50.1% 68,419 51.4%
Inflow 3,560 33.6% 38,917 44.8%
Interior 864 27.9% 30,785 39.6%
By Industry
Workers in the "Goods Producing" Industry Class
Outflow 2,837 11.9% 14,562 10.9%
Inflow 609 5.8% 17,088 19.7%
Interior 110 3.6% 11,088 14.3%
Workers in the "Trade, Transportation, and Utilities" Industry Class
Outflow 5,507 23.2% 28,532 21.4%
Inflow 2,379 22.5% 20,958 24.1%
Interior 790 25.5% 16,756 21.6%
Workers in the "All Other Services" Industry Class
Outflow 15,411 64.9% 90,006 67.6%
Inflow 7,601 71.8% 48,767 56.2%
Interior 2,194 70.9% 49,867 64.2%
Source: U.S. Census Bureau - Local Employment Dynamics (On The Map).
Apple Valley Dakota County
Number Percent Number Percent
The truly significant differences are that interior jobs and inflow jobs are lower paying and more
heavily concentrated in service industries than for Dakota County. This is a reflection of Apple
Valley's large number of retail and service establishments. Apple Valley should seek to use its
vacant and under-developed area to encourage industries with higher paying jobs.
Work Location
Apple Valley and Dakota County residents generally work in the same cities, as shown in Table
3-6. The largest proportions of Apple Valley and Dakota County residents work in Minneapolis,
12.2 and 11.7 percent, respectively. Apple Valley ranked second as a work location for city
residents. Other cities where Apple Valley residents work include: Eagan (9.6 percent),
Bloomington (8.8 percent), and Burnsville (8.6 percent). Almost 70 percent of Apple Valley
residents are employed in 10 communities.
WORK LOCATION OF APPLE VALLEY AND DAKOTA COUNTY RESIDENTS; 2009
TOP TEN COMMUNITIES
Work Location
Minneapolis 3,271 12.2 % 24,756 11.7
Apple Valley 3,094 11.5 9,041 4.3
Eagan 2,582 9.6 19,353 9.2
Bloomington 2,350 8.8 15,021 7.1
Burnsville 2,296 8.6 13,543 6.4
St. Paul 1,672 6.2 22,005 10.4
Edina 1,116 4.2 6,873 3.3
Lakeville 856 3.2 7,462 3.5
Bien Prairie 671 2.5 4,991 2.6
Minnetonka 567 2.1 N/A N/A
Hastings N/A N/A 5,422 2.6
All Other Locations 8,374 31.2 82,342 39.1
Source: U.S. Census Bureau.
Residence Location
Table 3-6
Apple Valley Dakota County
Count Share Count Share
Apple Valley and Dakota County generally draw their employees from the same cities, as shown
in Table 3-7. Of the top 10 cities where Apple Valley workers reside, Dakota County accounts
for 64 percent. Minneapolis, St. Paul, and Bloomington account for 9.4 percent of the workers.
The top nine communities account for about half of Dakota County workers.
Table 3-7
RESIDENCE LOCATION OF APPLE VALLEY AND DAKOTA COUNTY EMPLOYEES; 2009
TOP NINE COMMUNITIES
Residence Location
Apple Valley 3,094 22.6 % 10,618 6.5 %
Lakeville 1,477 10.8 10,961 6.7
Eagan 1,285 9.4 12,568 7.6
Burnsville 1,091 8.0 10,626 6.5
Rosemount 760 5.6 4,240 2.6
Farmington 566 4.1 4,264 2.6
Minneapolis 528 3.9 7,770 4.7
St. Paul 421 3.1 10,969 6.5
Bloomington 329 2.4
Inver Grove Heights 199 1.5 5,834 3.5
All Other Locations 3,934 28.7 81,266 49.4
Source: U.S. Census Bureau, OnTheMap Application and LEHD.
Educational Attainment
Apple Valley Dakota County
Count Share Count Share
Apple Valley and the MSA have similar proportions of residents with graduate degrees (12.8
percent) compared to 10.9 percent nationally, as shown in Figure 3-4. More Apple Valley
residents have bachelor's and associate's degrees, 29.1 percent and 10.3 percent, respectively,
than both the MSA and United States.
Figure 3-4
Apple Valley
11 County
Metro Area
U S
Educational Attainment, 2011
Less than H.S.
Some College
Bachelor's Degree
*.atti
44410,r,114
0011111100
PNN
0%
10%
20%
30%
40%
50%
High School Diploma Only
Associate Degree
Graduate Degree
GO% 70%
80%
90%
1
3-10
Job Creation
Changes in employment from year to year can mask employment changes that are occurring
within each industry category. Minnesota Department of Employment and Economic
Development (DEED) prepares a report that keeps track of total employment, net job flows, job
creation, new hires, separations, and turnover. What is significant in this database is the job
creation line, which indicates employees hired to fill a new job position. This could be a new
position in an existing company or employment by a new company. This information is
available from 2000 to 2010 for 105 industries. Industries in this report were reviewed and are
contained in Table 3-8, and those that represent companies that could consider Apple Valley as a
location were selected for evaluation.
Industry
Table 3-8
EMPLOYMENT CHANGE AND JOB CREATION
SELECTED INDUSTRIES: 2000 TO 2007 AND 2008 TO 2010
Computer and Electronic Product Manufacturing
Dakota County (217) 1,272 92 297
Minneapolis/St. Paul MSA (7,518) 11,359 (6,483) 4,773
1Vbscellaneous Manufacturing
Dakota County (284) 400 (167) 87
Minneapolis/St. Paul MSA (1,165) 4,425 1,261 1,412
Publishing Industries (Except Internet)
Dakota County 548 432 165 45
Minneapolis/St. Paul MSA (1,044) 4,131 142 853
Data Processing, Hosting and Related Services
Dakota County (310) 251 (42) 40
Minneapolis/St. Paul MSA (4,329) 2,424 (1,388) 513
Other Information Services
Dakota County 416 145 (23) 29
Minneapolis/St. Paul MSA (37) 1,059 (136) 328
Insurance Carriers and Related Activities
Dakota County 1,370 960 (227) 586
Minneapolis/St. Paul MSA 6,309 11,530 1,607 2,642
Professional, Scientific, and Technical Services
Dakota County 4,042 3,228 (3,194) 1,401
Minneapolis/St. Paul MSA 1,535 43,843 (6,267) 16,331
Management of Companies and Enterprises
Dakota County (1,475) 954 (991) 716
Minneapolis/St. Paul MSA (24,245) 23,035 (9,871) 9,231
Administrative and Support Services
Dakota County 1,866 3,348 (1,200) 2,003
Minneapolis/St. Paul MSA (4,170) 43,354 (8,782) 25,375
* Second Quarter.
Source: Minnesota Department of Employment and Economic Development.
2000-2007 2008-2010*
Employment Job Employment Job
Change Creation Change Creation
The objective was to determine change in total employment during the period 2000 to 2007,
which began with the peak of the previous economy cycle and ended with the peak of the last
economic cycle. The second period, from 2008 to 2 quarter 2010, included the great recession.
Using Computer and Electronic Product Manufacturing as an example, total employment
between 2000 and 2007 declined by 217, but 1,272 new jobs were created by that industry
category in Dakota County. During the recessionary period, total employment increased by 92
jobs and 297 new jobs were created. In the MSA, job creation was even more dramatic.
Between 2000 and 2007, total employment declined by 7,518 positions, while 11,359 new jobs
were created. Between 2008 and 2010, total employment declined by 6,483, and 4,773 jobs were
created. The comparisons are similar for the other categories.
Health care is an obvious growth industry and is likely to continue to expand. Job creation in
this category is closely related to total employment change, as shown in Table 3-9. Ambulatory
Health Care is the overall category for individual categories in the table. In Dakota County,
employment increased by 2,552 between 2000 and 2007. Job creation represented 1,711 of that
employment increase. In the more recent period, total employment change was 372 and job
creation was 735. The relationship between employment change in the MSA is even more
dramatic.
Industry
Table 3-9
EMPLOYMENT CHANGE AND JOB CREATION
HEALTH CARE: 2000 TO 2007 AND 2008 TO 2010
* Second Quarter.
Source: Minnesota Department of and Economic Development.
3-12
2000-2007 2008-2010*
Employment Job Employment Job
Change Creation Change Creation
Ambulatory Health Care Services
Dakota County 2,552 1,711 372 735
Minneapolis/St. Paul MSA 17,913 17,185 1,255 7,858
Offices of Physicians
Dakota County 444 442 439 164
Minneapolis/St. Paul MSA 5,785 5,532 (553) 2,258
Offices of Dentists
Dakota County 340 436 (157) 134
Minneapolis/St. Paul MSA 1,084 2,947 (267) 1,048
Offices of Other Health Practitioners
Dakota County 473 368 84 170
Minneapolis/St. Paul MSA 1,578 3,001 542 1,250
Medical and Diagnostic Laboratories
Dakota County 18 33 6 13
Minneapolis/St. Paul MSA 184 248 169 139
To the extent that job creation is occurring in businesses that are growing or in new companies,
this is an opportunity for a business relocation or a new business location. Capitalizing on this
information requires a new approach to business development that find a way to identify those
businesses that are creating jobs.
Future Employment
Future estimates of employment in the Seven-County Metropolitan Area (Metro Area) by
NAICS categories were prepared for the period 2009 through 2019 by the Minnesota Department
of Employment and Economic Development (DEED). These estimates project total employment
to increase from 1,685,505 in 2009 to 1,829,604 in 2019, an increase of 144,099 or 8.5 percent,
as shown in Table 3-10. These projections include full- and part-time jobs and not the number of
employed persons. This information is the best available to indicate those business categories
where employment is expected to increase generating demand for additional building area.
Estimates are prepared for industrial categories by North American Industrial Classification
System Code (NAICS) to the seven-digit level.
The Goods-Producing Domain is expected to decline by 3.1 percent; while the Service-Providing
Domain is expected to increase by 9.9 percent. Construction is the only bright spot in the
Goods-Producing Domain, estimated to increase 18.2 percent. Within the Service-Providing
Domain, all categories except Information, are estimated to have increased employment. It is the
Service-Providing Domain that provides the greatest opportunity for employment growth in
Apple Valley.
Table 3-10
EMPLOYMENT OUTLOOK; 2009 TO 2019
SEVEN-COUNTY MINNEAPOLIS-ST. PAUL, MN
2009 2019
NAICS Estimate Year Projected Year % Total
Code Title Employment Employment Change Change
0 Total, All Industries 1,685,505 1,829,604 8.5 144,099
101 Goods-Producing Domain 216,653 210,006 (3.1) (6,647)
1011 Natural Resources and Mining 3,664 3,513 (4.1) (151)
1012 Construction 51,280 60,617 18.2 9,337
1013 Manufacturing 161,709 145,876 (9.8) (15,833)
102 Service-Providing Domain 1,389,934 1,527,660 9.9 137,726
1021 Trade, Transportation and Utilities 297,920 302,383 1.5 4,463
1022 Information 40,236 38,843 (3.5) (1,393)
1023 Financial Activities 132,755 142,315 7.2 9,560
1024 Professional and Business Services 250,931 289,249 15.3 38,318
1025 Education and Health Services 338,755 402,320 18.8 63,565
1026 Leisure and Hospitality 148,501 162,615 9.5 14,114
1027 Other Services 74,461 80,225 7.7 5,764
1028 Public Administration 106,375 109,710 3.1 3,335
Source: Department of Employment and Economic Development.
Future employment growth in business categories suitable for a business park in Apple Valley
are contained in Table 3-11 and represent a wide variety of businesses. These categories
represent businesses or industries that would be suitable for business park location in Apple
Valley and represent a wide range of business types. Employment in these categories is expected
to grow from 370,537 to 426,599 in 2019, a 15 percent increase. Businesses in these categories
are likely to be seeking additional space in the future. Apple Valley has clusters of businesses in
some of these categories, as was shown in Table 3-2.
NAICS
Code
Title
Table 3-11
EMPLOYMENT OUTLOOK; 2009 TO 2019
SEVEN-COUNTY MINNEAPOLIS-ST. PAUL, MN
2009 2019
Estimate Year Projected Year Total
Employment Employment Change Change
Manufacturing
3252 Resin, Rubber, and Synthetic Fibers 187 221 18.2 % 34
3254 Pharmaceutical & Medicine Manufacturing 3,089 3,650 18.2 561
3345 Electronic Instrument Manufacturing 23,886 25,875 8.3 1,989
3359 Other Electrical Equipment & Components 628 700 11.5 72
3391 Medical Equipment and Supplies Mfg 14,301 16,600 16.1 2,299
3399 Other Miscellaneous M anufacturing 3,316 3,800 14.6 484
Wholesale Trade
425 Electronic Markets and Agents/Brokers 19,796 22,020 11.2 2,224
Transportation and Warehousing
4885 Freight Transp ort at ion Arrangement 2,053 2,267 10.4 214
Information
5112 Software Publishers 5,132 6,100 18.9 968
518 ISPs, Search Portals, & Data Processing 6,165 7,413 20.2 1,248
5182 Data Processing and Related Services 6,165 7,413 20.2 1,248
519 Other Information Services 1,138 1,553 36.5 415
Finance and Insurance
5241 Insurance Carriers 36,641 37,400 2.1 759
5242 Insurance Agencies, Brokerages & Support 13,495 15,920 18.0 2,425
Real Estate
5311 Lessors of Real Estate 9,306 10,544 13.3 1,238
5312 Offices of Real Estate Agents & Brokers 3,608 4,263 18.2 655
5313 Activities Related to Real Estate 8,958 10,703 19.5 1,745
533 Lessors, Nonfinancial Intangible Assets 1,150 1,490 29.6 340
Professional and Technical Services
5411 Legal Services 15,354 16,423 7.0 1,069
5412 Accounting and Bookkeep ing Services 10,852 12,350 13.8 1,498
5413 Architectural and Engineering Services 14,731 16,500 12.0 1,769
5415 Computer Systems Design and Rel Services 25,003 31,020 24.1 6,017
5416 Management & Technical Consulting Svc 11,799 19,300 63.6 7,501
5417 Scientific Research and Development Svc 5,737 6,742 17.5 1,005
5418 Advertising and Related Services 8,388 8,690 3.6 302
5419 Other Professional & Technical Services 8,661 11,244 29.8 2,583
Management
55 Management of Companies and Enterprises 62,471 66,800 6.9 4,329
Administrative and Support Services
5611 Office Administrative Services 3,441 3,982 15.7 541
5613 Employment Services 35,347 42,960 21.5 7,613
Education
6114 Business, Computer & M anagement Training 1,256 1,310 4.3 54
6115 Technical and Trade Schools 977 1,023 4.7 46
6116 Other Schools and Instruction 5,366 7,505 39.9 2,139
6117 Educational Support Services 2,140 2,818 31.7 678
Count 33 33
Total 370,537 426,599 15.1 % 56,062
Source: Department of Employment and Economic Development.
3-14
Health Care
Health care is an area that is expected to grow rapidly during the 2009 to 2019 period, as shown
in Table 3-12. The estimated increases in employment in this category range from 11.6 percent
to 55.8 percent. The fastest growing category is Medical and Diagnostic Laboratories. Other
categories with significant growth prospects are Offices of Physicians, Home Health Care
Services, and Ambulatory Health Care Services; all of which are expected to grow at greater than
30 percent over the 10-year period.
NAICS
Code
Title
Ambulatory Health Care Services
6211 Offices of Phy sicians 26,286 34,760 32.2 % 8,474
6212 Offices of Dentists 9,528 11,670 22.5 2,142
6213 Offices of Other Health Practitioners 6,627 7,657 15.5 1,030
6214 Outpatient Care Centers 6,687 10,372 55.1 3,685
6215 Medical and Diagnostic Laboratories 1,398 2,178 55.8 780
6216 Home Health Care Services 10,929 14,732 34.8 3,803
6219 Other Ambulatory Health Care Services 4,617 6,135 32.9 1,518
622 Hospitals 53,917 61,648 14.3 7,731
623 Nursing and Residential Care Facilities 43,571 50,006 14.8 6,435
6231 Nursing Care Facilities 20,281 22,771 12.3 2,490
6232 Residential Mental Health Facilities 13,630 15,212 11.6 1,582
6233 Community Care Facility for the Elderly 7,559 9,293 22.9 1,734
6239 Other Residential Care Facilities 2,101 2,730 29.9 629
Total 207,131 249,164 20.3 % 42,033
Source: Department of Employment and Economic Development.
Table 3-12
HEALTH CARE
EMPLOYMENT OUTLOOK; 2009 TO 2019
SEVEN-COUNTY MINNEAPOLIS-ST. PAUL, MN
2009 2019
Estimate Year Projected Year Total
Employment Employment Change Change
Chapter IV
BROKER INTERVIEWS
Over 35 commercial real estate brokers with a history of working within the study area were
contacted. Nineteen respondents were interviewed. The responses and questionnaire are found
in Appendix A. A summary of the findings are as follows:
• Eighteen of the 19 respondents, which included one developer, have worked in the Apple
Valley area.
• Eleven respondents stated they had worked with the City of Apple Valley and had a good
or very good experience.
• Many respondents, when asked about trends in the market in the next 15 years related to
Apple Valley and the Hanson Site, suggested a variety of uses ranging from headquarters
facilities, light industrial, and multi-family. However, most respondents suggested light
industrial that didn't require immediate access to major transportation corridors as the
best use.
• Retail has been successful, and if allowed more retail would locate in Apple Valley.
However, marketing to manufacturing, high technology, and larger companies simply has
not been successful in the past. Most respondents continued to refer to Apple Valley
being off the main transportation corridors and a few felt real estate taxes were higher in
Apple Valley than the surrounding area.
• Apple Valley differs from other areas of Dakota County in that the city seems secondary
to Burnsville for retail and Eagan for large successful companies. It is evident that the
city does not have any planned business and industrial parks like most cities.
• Users that may find the area attractive in the next 10 to 15 years will be high technology
as other parts of the south metro fill up. In addition, the commute will continue to be
more costly and time consuming to go downtown even though BRT is coming. People
will need to find a way to live closer to where they work.
• Some brokers suggested that the fastest way to develop the site is allow more "big box"
retail developments along County Road 42. The north end of the site could develop into
multi-family housing.
• The strong consensus of brokers regarding value, if all 80 acres were purchased by one
party, was $2.50 per square foot. If developed by multiple users the value would range
from $5.00 to $7.00 per square foot along County Road 42 to $1.00 to $3.00 per square
foot moving to the north end of the site.
Survey respondents felt Apple Valley and the Hanson Site was appropriate for single purpose
corporate office high tech uses that were not dependent on convenient truck access.
Chapter V
DEVELOPMENT STRATEGY RECOMMENDATIONS
The 80-acre Hanson Site is over one-half of the available business park land in Apple Valley.
There are currently 39 parcels of land 10 acres or larger offered for sale in Dakota County
competitive cities. These parcels total 1,225 acres, and the Hanson Site is the 3 largest.
Though there are many alternative properties for development in the region, the Hanson Site is
well located and suitable for more intensive development that could provide an opportunity for
higher income jobs for Apple Valley residents and provide more balance to the City's job
market. However, at the present time, there is little to distinguish the Hanson Site from the other
parcels. This must be changed if development is likely in the near future.
The strategy to encourage development of the Hanson Site will need to take into consideration
the new realities of business park development. In the past, Dakota County has enjoyed
generally solid growth in its office and business park development. This has changed. It's no
longer sufficient to list property with a broker, install a sign, and hope that someone will call.
The brokerage community tends to overlook Apple Valley because it does not have an
established business park with developable sites. As a result, Apple Valley cannot rely on the
usual land marketing procedures of the real estate industry which everyone else is using.
Apple Valley must develop a marketing plan that it attracts attention and stands out in the
crowded development field. This plan should capitalize on Apple Valley's many strengths
including:
• Apple Valley's residential lifestyle and attractive neighborhoods to reinforce the "close to
home" business location criteria, which is important to many executives.
• High level of educational attainment compared to the nation.
• High concentration of scientific, technical, and professional service occupations
compared to the nation.
• Apple Valley's proximity to MSP International Airport (14 miles) and the international
destinations served by Delta with direct flights or connections through Amsterdam.
• U.S. headquarters of Uponor, the largest supplier of heating and cooling pipe in North
America.
• Utilize Apple Valley's significant retail presence to expand the presence of health care
and medical services, both to individuals and other health care industry participants.
Apple Valley needs to take control of marketing messages and implement a consistent marketing
and development approach.
5-1
Marketing and Development Strategy
Much of the available business park land in Apple Valley is in the hands of aggregate producers,
which is nearing the end of its life cycle in Apple Valley. The Hanson Site and other aggregate
mining parcels total about 300 acres. These owners are not business park developers.
Aggregate landowners in Maple Grove faced a similar situation. The approach used in Maple
Grove involved the landowner forming a development relationship with a capable developer to
market the site and take down land as development opportunities arose. This created a monopoly
situation where a potential business had to negotiate with the developer.
In some cases, cities seeking to increase development have purchased land and developed a city
sponsored business park. This approach creates an opportunity where any developer can
purchase and develop a building with city help. The drawback is that the city has to buy the land
and install infrastructure and issue bonds to pay the costs before land can be developed. This
places the city in a position of considerable risk.
The approach suggested in this report provides a less risky and more open approach. Apple
Valley could establish a public/private entity to take an active role in marketing development
opportunities on the Hanson Site and other vacant business park land in the City. This entity
could provide general marketing for Apple Valley and be a focal point for development
inquiries. The public/private partnership would also provide marketing and development
planning services under contract for landowners. The partnership could operate with a limited
staff and use subcontractors to provide specialized services such as marketing, advertising,
research, local, national and international business recruitment, and other services. Business
park property owners would authorize the partnership to market their property and pay a
commission and marketing reimbursement fee when a property was sold. Additionally, the
partnership could contract for and supervise platting and site design services. The objective is
for the partnership to be a one stop development agency for the City and landowners. It would
also create an open playing field for developers since it would be a facilitator bringing a potential
tenant to Apple Valley and any developer could develop on land represented by it.
Any developer or business seeking a site could purchase land from an Apple Valley landowner.
This expands the number of developers that could consider Apple Valley as a location. The
partnership promotes Apple Valley and its business parks, but does not incur the carrying costs
or risk. The city also has the flexibility to use the professional and development resources that
are suitable for each development opportunity.
Strategies that can be employed to encourage proper development by working with the current
property owners could include:
• Unified marketing effort directed at targeted business groups.
• Assisting in planning the mixed-use development and dividing the site into development
parcels within the site that could be sold to users and developers.
• Place higher value, possibly multi-story buildings on 150 Street and one-story buildings
on the north portion of the site.
• Offer incentives for the targeted uses that could include tax increment financing, tax
abatement, and special assessment districts.
• Seek to encourage public/private partnerships with utility companies and other companies
to reduce cost of occupancy in Apple Valley. These partnerships may include installing
infrastructure using incentives and working with suppliers and business partners that may
have an interest in co-locating with Uponor.
Apple Valley should focus on attracting companies within those business groups where the City
has a competitive edge. The City should cooperate and use the resources of Greater MSP in
support of its activities. Greater MSP has identified the key industries and business sections that
are most important now and in the future. Those business categories that are compatible with
Apple Valley and Dakota County include:
Bio Tech
Health Care Providers
Health Care Payers
Health Care IT
Software/IT
Insurance
Corporate Headquarters
Professional Services
R & D Centers
Advanced Manufacturing
Energy/Renewables
Creative Services
Apple Valley should also explore the potential for a Global Innovation Park focused on
sustainability capitalizing on European leadership in this area. The Global Innovation Park
would focus on incorporating advanced technology to reduce energy consumption, reduce carbon
footprint, and other conservation related activities. This could include knowledge transfer of
European techniques to the United States. Using a local company that has European
connections, such as Uponor, could be a component of the Global Innovation Park.
Uponor is widely recognized in green industry circles for its leadership in energy efficient
heating and cooling systems, including geothermal and district heading technology. Minnesota
was recognized as the fourth most sustainable state in the United States by Site Selection
magazine in July 2011. A sustainable approach could strengthen marketing of the site and attract
high quality tenants. Minnesota provides national leadership in energy related fields including
Honeywell controls, Daikin McQuay industrial heating and cooling, and the glass cluster that
stretches from Burnsville to Owatonna near 1-35. The opportunity to develop the site in a cost
effective but sustainable manner should be pursued including transit links and possible LEED
certification. Possible partnerships with Uponor and/or Xcel Energy should be explored.
Professional and technical services related to health care are a growth niche well suited to the
Twin Cities and Apple Valley. These are services that can be made available regionally,
nationally, or globally. Examples of some services that demonstrate growth potential and are a
good fit for the Hanson Site and area workforce include:
• Medical services including, but not limited to: physician's offices, surgical centers, and
diagnostic services.
• Sophisticated medical reference laboratories and genetic testing.
5-3
Processing/production — drug compounding for generic drugs; pharmacies that handle
monthly or quarterly refills by mail.
Medical informatics/payment processing.
These recommendations are consistent with objectives to create higher income jobs in Apple
Valley, increase the community business diversity, and create high value buildings and tax base.
Appendix A
Optional
Broker/Developer Name:
Firm:
Phone:
I am assisting McComb Group, Ltd who has been retained by the City of Apple Valley
to study and explore reuse of 80-acre Hanson Concrete Site located at Johnny Cake
Ridge Road and CR 42 (150 St.) 1.5 miles east of Hwy 77 (Cedar Ave). The City's goal
is to create a development that generates head-of-household employment
opportunities. We would greatly appreciate it if you would take a few moments to
complete the attached survey and return via email to bmaus@northco.com at your
earliest convenience. Thank you.
Are you a commercial broker or developer?
• 18 broker responses
• One developer response
Appendix A
BROKER SURVEY
HANSEN CONCRETE SITE
Have you worked in what you consider the Apple Valley and surrounding market as
noted on the attached map?
• 18 said yes.
• Yes. Our Land Services Team is very active within the City of Apple Valley and
surrounding market with over 40 active listings both raw land and
industrial/office properties.
• No
Have you ever worked with the City of Apple Valley and how would you characterize
your experience?
• Seven said no
• We have worked with the City of Apple Valley on our listing located on the
northeast corner of Johnny Cake Ridge Road and Upper 147 Street West. This
site is approximately 12.76 acres in size and is across the street to the northeast
of the Hanson site. We were recently successful on a sale of approximately a
2.36 acre site. In order to complete the transaction we worked with the City
dealing with the extension of Upper 147th s West to Johnny Cake Ridge Road,
for the Buyer to gain access into the site. The City of Apple Valley was very
cooperative and easyto work with due to their stance on the importance ofjob
creation.
• Yes. Have sold Iight industrial property in Apple Valley and had a very good
experience with the City.
• Yes. It was OK.
• Yes. Apple Valley is "Top She|f" great to work with
• Yes. The City has been very helpful
• Yes. The City is very good to work with.
• Yes, good!
• Yes, fine.
• Yes, great!
• Limited experience with the City of Apple Valley but no issues.
• Yes, good.
What trends do you see in the market over the next 15 years that we should keep in
mind as we consider reuse of the site?
• Tech/Flex buildings — Transition to multi-family
• Over the next 15 years, we would fully expect that the existing vacancy that is
plaguing the industrial and office sectors would be absorbed leading companies
to start to look at expansion/new development once again.
• We believe there is a potential for Headquarter facilities and build to suit for
owners. Rental market will continue to be challenging.
• We see an increase in office and light industrial use.
�
There will be increasing demand for a mix of housing and retail
• Don't see much opportunity for tech development. Residential and retail work.
Nice location for small business but there is plenty of retail.
• Retail is well developed. Office is tough in AV. Could be a corporate site.
• The industrial market is shallow. We assume it will remain so especially in Apple
Valley because it is away from the main transportation corridors.
• The problem for Apple Valley to continue to focus on is they are not adjacent to
the m jor transportation corridors. They need to do whatever they can to
improve this.
• lnfrastructure and roads are a limiting use for the property. Businesses with no
semi trucks. Good location for technology businesses. Data centers and fiex
buildings. No housing or retail. Could be a good corporate campus site with
• More retail but not for some time. That's down the road a ways.
• It's a good location. Retail could go there but not for awhile. Reuse shouldn't be
heavy industrial. Better suited for light industrial.
• | have noidea?
• 1 see a combination of residential and mixed use development.
• Apple Valley is a shallow office & industrial market and will see very limited
development.
• A shift away from conventional office space.
In your experience, what has succeeded or not succeeded in the Apple Valley area?
Why or why not?
• It is pretty evident if you are at the County Road 42/Cedar Avenue intersection
on a Saturday afternoon what has seen its share of success in Apple Valley The
County Road 42 corridor that spans approximately 12 miles from east Apple
Valley to Savage is one of the state's largest retail corridors. This is the "go-to
area for shopping amongst residents from all over the south metro. Apple Valley
has taken advantage of this centralized location and made this area an attraction
for residents to come and shop.
• We don't see a real high percentage as high tech users but that is a market to
explore.
• Apple Valley is more difficult because the taxes are higher than the balance of
Dakota County.
• Apartments work well in Apple Valley. Manufacturing is a challenge.
• Sort of a tough location because Apple Valley and the site are not close to the
main transportation corridors.
• The City needs to understand how to work with smaller businesses of many
different kinds. The north end of the City is difficult.
• lf it's right on 42, retail is the best.
• In this case larger users will be more successful.
• Ingress/egress remains an issue as AV does not have convenient access to m 'or
interstate arteries.
• Apple Valley has been successful at housing and retail.
How does Apple Valley differ from other areas of the metro area/Dakota County?
Why?
• Site is very flat — Apple VaUeyis'transportationchaUenged".Anyheavyuse
would have a problem if there were an impact on the transportation system
• To branch off from the last question of what Apple VaIley has DONE to
experience success, the answer to this question is what Apple WILL DO to
experience future success. What makes Apple Valley stand out and differ from
Eagan and Burnsville is the amount of potential growth that will be available in
the years to come. Eagan and Burnsville are primarily built out to capacity with
their industrial/office parks and retail hubs.
• Apple Valley has more retail than other areas except Burnsville Center. Real
competition is Rosemount and Lakeville.
• Apple Valley hasn't planned this area and the gravel mining area well.
• We just don't see much industrial because access is not convenient.
• Apple Valley is similar to much of Dakota County.
• The main difference is being away from the main transportation corridors.
• Apple Valley seems more limiting on commercial than Eagan.
• App|eVaUeyisastrong"Hub"after8urnsvU|eandEagan. The City is advanced
and can process and handle sophisticated clients.
• Apple Valley is further out. Density is less than Burnsville and Eagan. 1 think of it
as a sub region compared to others.
• The City lacks organized office and industrial business parks. A wide variety of
development has occurred randomly throughout the City.
• Very strong retail market because of residential density and income.
What assets do this area of the metro offer that might define a niche for the site?
• Best use is a campus type site
• lf 1 am looking at the Site itself, its location is the biggest asset being located on
the corner of County Road 42 and Johnny Cake Ridge Road. The County Road 42
traffic is a m jor asset to this area and any company or companies that locate on
the Hanson Concrete Site will understand the visual recognition they will receive.
At this Iocat workers will also be in close prox to the variety of
restaurants and shopping Iess than one mile away. When looking at this area of
the metro, I cannot help to think of the incredible educational school systems,
city park and recreational facilities, MVTA Bus Transit, and of course, The
Minnesota Zoo.
• Retail proximity, traffic and exposure. Potential for heavy industrial outside
storage.
• Strong retail trade area.
Over the next 10-15 years what types of users might find this site attractive?
O Non "Smoke stack" type uses
•
In the Iast 1 — 2 years we have seen multiple requirements for raw land to
accommodate Iarge distribution facilities. This area is used to seeing Iarge trucks
in and out from Fischer Gravel, so we definitely see this as that kind of
opportunity here. Industrial/Office/Showroom users would all be Iogical
candidates to go on this site, in addition to the few large box retailers currently
not in Apple ValIey market. The main thing for the City to do in order to see this
site develop is to keep an open mind and to have patience. Companies will get
creative and this is certainly not an overnight project.
• We think the most demand in the future for Apple Valley will be single and multi-
family development.
• The site will attract retail and/or industrial users. It is also ideal for residential
development. Given the size of the site, it could be considered for a corporate
campus but unless there is something unique about the requirement, current
market conditions suggest this would be several years out. There is too much
existing space to be absorbed within the inner tier markets.
• Non-traditional industrial uses, retail & housing.
This is an 80 acre site which creates some challenges as well as opportunities. What
types of users might find a large infill parcel attractive?
• Regarding challenges 1 think the pipe line and the tank farm nearby are a
problem. 1 understand there was a recent spill at the tank farm.
� Best use is retail especially along CR 42.
�
Lifeworks or ProAct type user (sheltered workshop for disabled). The site is best
for owner/users rather than speculative or multi-tenant users.
� Big box retail. High density residential. Heavy industrial.
Bringing the various factors together - size of parcel, location and a cooperative city —
what opportunities would you suggest that the City explore?
• The Site lends itself well to industrial, office and retail users and is located on a
well traveled hard corner. In addition the site is quite Iarge. We would suggest
exploring a plan to incorporate all ofthe above uses in different capacities in
order to absorb the land while providing varying employment and amenities that
will attract land while providing varying employment and amenities that will
attract employers. Other than this, obvious incentives such as Tax Incremental
Financing or Tax Abatement would help lure different companies to the site that
may be weighing a few different options. The ability to subdivide and sell
smaller parcels would be an advantage, as well as, providing flexible zoning so as
to not discourage users from considering the site.
� Possible Iocat for off users.
O 1 think the prospect of high finish development is remotely possible but 1 would
suggest concentrating efforts on more likely prospect of developing the site for
retail, residential or continued heavy industrial.
O Leave as is, let the market dictate the use.
The site is served by water, sewer and Xcel Energy. The soils are consistent with the
surrounding gravel mining area. The site is flat. What do you think the land is worth
per square foot?
O The site will be difficult to sell to one buyer therefore, if it is broken up and sold
as multiple parcels the average price would be about $4/sf
O Depending on the end use, size of site, and any possible improvements
completed prior to a sale, we believe the land is worth $2 - $10psf (per square
foot)
• As one parcel - $2.50 to $2.75/sf
• $2.50 to $2.75/sf
• Retail would expand there. As a non-retail use 1 don't know. Taxes are an issue.
• It depends on the use but - $2.50 a square foot.
• 80 acres - $2.50/sf
• Top price if the front 20 acres were purchased $6 - $7/sf. For the whole parcel
as one sale. Hard to say.
• $2.50 to $3.00/sf
• Front half is best for retail and worth $5-$7/sf. The back half is worth $O-$3/sf
� $5-$6/sf for retail along 42 and i[ sold as one parcel !think it's worth about
$2.50/sf.
• $2.50/sf is a good asking price but the selier should be willing to take less
because a parcel that size will be on the market for a long time.
� 1 really don't know what the value should be.
�
It really depends on the use. 1 don't think there should be multi-family on the
site and the way it is it will take a long time to develop.
�
$2.50 is an OK price. 1 can imagine a very nice industrial park.
• $3/sf
• This depends on what is allowed.
• $LOO - $3.00 depending on use/user
City of Apple II
Valley
TO:
FROM:
MEETING
DATE:
SUBJECT:
President, Board Members and Executive Director
Bruce Nordquist, Community Development Director, MCP
March 28, 2013
Central Village West Updates
MEMO
Community Development
The materials attached to this cover memo provide the background for discussion related to the Central
Village West area:
1) The vacant parcels both north and south of 153rd Street and west of Galaxie Avenue have become
owned by the State due to tax forfeiture. The City/EDA and Dakota County CDA staffs have been
discussing development opportunities and priorities based on the materials provided.
2) The parcels north and west of Grandstay Hotel have been identified as a location for office
development. Financial assistance for the development is being sought from multiple sources
including:
Special Legislation which extends "jobs bill" tax increment financing.
Reprogramming of a $866,000 Livable Communities TOD grant already received by the
City.
MN DEED "Minnesota Investment Fund" resources for business equipment.
The attached map identified the office and structured parking development area. The attached City
Council staff report discusses the Livable Communities TOD grant reprogramming request the City
Council will consider the evening of March 28, 2013.
map
map
Background:
0**
City of Apple,
Val e
TO:
FROM: Bruce Nordquist, Community Development Director, AICP
MEETING
DATE: March 28, 2013
President, Board Members and Executive Director
SUBJECT: Development Strategy for Central Village West
MEMO
Community Development
On March 18, the Dakota County CDA sent a letter to Tom Lawell outlining a collaborative approach
with the City/EDA to the development of the six parcels north, west, and south of Grandstay Hotel in
the Central Village. The parcels are vacant and owned by the State due to tax forfeiture and managed
by Dakota County until conveyed. In the absence of being acquired by a governmental agency the
parcels will be available for auction later this spring.
Last fall both the City and CDA submitted a letter to Dakota County expressing a period of time to
evaluate interim ownership interest and future development strategies. That period of time expires
May 2, 2013, and the CDA has prepared a letter that reflects the collective discussion of City and CDA
staff and requests consideration of certain terms and conditions between the agencies.
City/EDA objectives include:
• Development consistent with Central Village plans on 4 parcels.
• Payment for levied special assessments.
• Transit oriented features; higher intensity development with job creation and housing choices.
• Securing sufficient site control that allows these listed items to be addressed in a timely market
responsive manner.
The CDA objectives include:
• Market rate housing with some affordability.
Support from the City should the CDA consider using tax increment financing.
• Land banking of two parcels for future housing development. (Waiting until after Parkside Village
is completed and occupied before proceeding with development).
A payment of some, but not all special assessments attributed to the two parcels.
After much staff discussion, a recommendation is proposed by staff that the City/EDA consider the
acquisition of four parcels (parcels A, B, C, D on the attached map). The CDA wishes to acquire
parcels E and F.
Next Steps:
A discussion about value is underway with the City Attorney and Dakota County. The position
being taken is that the property has little value beyond the special assessment payments outstanding
that the City is allowed to re-levy after the property is conveyed.
• The terms outlined by the CDA require further discussion as it relates to payment for special
assessments and development expectations. The following table summarizes unpaid special
assessments and future assessments:
Proposed
Ownership
EDA Parcel
EDA Parcel
EDA Parcel
Map
key PID
A 01 81750 010 03
B 01 81750 020 03
01 81750 010 02
CDA Parcel E 01 81750 011 00
CDA Parcels F 01 03400 020 28
2008 to 2013 -
Total Previously 12-31-2013
Spread S/A Unspread
(Prin & Interest) S/A Balance
$ 189,558.60 $ 203,056.00
225,487.00 242,134.70
187,526.30 200,825.35
602,571.90 646,016.05 1,248,587.95
Triangle (EDA) D 01 81750 010 01 1,134,552.82 1,321,817.05
894,162.81 1,093,223.21
119,536.97 166,260.15
1,013,699.78 1,259,483.36
2,750,824.49 3,227,316.46
total Potential
Re- Levy
$ 392,614.60
467,621.70
388,351.65
2,456,369.87
1,987,386.02
285,797.12
2,273,183.14
5,978,140.95
• Staff will continue working with the CDA during April to finalize terms for a "memorandum of
understanding" between the EDA and the CDA.
March 18, 20
Dakota County
Community Developmeat
gency
1228 Town Centie ,LtVe. 1 Eagan, .N1\1 55123
prt.04; 651-875-4400 Too/ 711
w
Tom Lawell
City of Apple Valley
7100 147 Street W
Apple Valley, MN 55124-90
RE: Tax it Parcels in Apple Valley (Founders Circle area of Central Village)
Dear Tom,
The purpose of this letter is to sUmmarize the Dakota County Community Development Aencys (COA's
due diligence and recommended actions regarding the tax forfeit parcels in the Founders Circle area*
The CDA Board of Commissioners adopted a resolution on October 16, 2012 requesting the conveyance
of the six tax forfeit parcels in the Founders Circle area (PINs: 01-81750-03-010, 01-81750-03 01
1750-02-010; 01-81750-01-010; 01-81750-00011; and 1-03400-28-020), Prior to this Board action„
CDA staff met with City staff to diSCUSS the CDA's interest in acquiring a housing site and options for the
CD/ and City to work together to facilitate future development consistent with City goals and objectives.
To this end, the CDC' submitted its request for conveyance to the County,
The City subsequently sent a letter, dated November 2, 201,2, to the County Property Taxation
Records Dprtment, stating the City's andfor City Economic Development Authority's (EDA's) interest
in the same six parels. The City requested the withholding of these parcels from conveyance or sale to
other parties for six cn The letter stated that "The City and EDA desire to work closely with the
COA in evaluating the potential for the prcels. The intended outcome is a collaborative master plan and
the attraction and initiation of development achieving the public purposes of the entities involvefi"
Over the last several months, CDA staff has worked with County staff to cry the method, process and
timeline for the conveyance of these parcels to the CDA, City, and/or the ELM*. CDA and City staff have
met to discuss the City's expectations and options for the development of these parcels, and the CDA
has evaluated the parcels and narrowed its interest to two parcels that are best suited for a housing site*
The result of this due diligence over the last several months is described in greater detail below.
Method Process and Timeline for Cone ance to CDA Ci and or EDA
Through discussions with Dakota County taxation staff, the CDA has received the folio g uidance:
The end of the City-requested six month withholding period is May 2, 2013.
, „ • • „, • , • , •
If the City does not purchase or request purchase of the parcels by May 2, 2013, the City must
not make a second request to withhold the parcels from sale or lease within 18 months of the
previous request (May 2, 2014).
After May 2, 2013, the County may act on the CD's previous request, entertain requests from
other public: agencies, or proceed with the inclusion of the parcels in the public sale of tax forfeit
poprties. Unless the City or CDA take action before or shortly after May 2 the parcels may
be included in the public auction.
The City's, EDA's and/or CDAfts request to purchase the parcels must include "its specific plans
for correcting the blighted condons or developing affordable housing„ and the specific law or
laws that empower it to acquire real property in furtherance of the plans" (Minnesota Statutes
Section 22.01 SubcI. la. (d) (2)), County staff will Compete the Department of Revenue
Applications for State Deed for Tax Forfeit Land based on the request) made by the City EDA
and/o• CDA.
Acquisition costs are expected to be minimal:
o Minnesota Statutes Section 282.01 (d) (1) states that the County may sell tax forfeited
property to a governmental subdivision of the state for less than market value if "the
county board determines that a sale at a reduced price is in the public interest because
a reduced price is necessary to provide an incentive to correct the blighted conditions
that make the lands undesirable in the open market, or the reduced price will lead to
the development of affordable housing."
The excessive special assessments on the property have created a blighted c ndition,
making the properties undesirable in the open market,
The riiinimum price that could be established under statute is $100.
CAA Potential Collaborat ve Master Plan
Ci
City and CDA staff have worked together to evaluate the potential for the tax forfeit parcels, resulting in
proposed master plan including the components listed in Table A below and the attached Map A.
Table A includes the recommended entity to acquire each parcel based on the public purpose of the
entities involved.
as
01-81750-00-0 &
01-03400-28()
Table A. Proposed
Parcel Label and
Description
Parcel A:1.67 acres
Parcel B: 2.03 acres
Parcel C: 1.64 acres
Parcel D: 3.55 acres
Parcel E 84. F: 4.8 acres
CDAandCit. E
er Plan
Parcel Identification
No.
01-81750-03-01
01-81.750-03-020
01-8i750-02-0
ns a nd Conditions
ectati
Master Plan Use
Housing
CityjEDA
City/E).\
City/EDA
City/EDA
Entity to Acquir
Comrnercial/Office Development
Commercial/Office Dev men
elopt
_
Future Structured Parking
andrnark Comer: future mixed-
Lise with place-making feature(s)
Dakota County
CDA
The CDA's interest in the housing site is subject to certain conditions required to ensure feasibility.
Likewise, the City has certain expectations regarding the future development of these parcels. The CDA
believes that it would be beneficial to both parties to establish expectations and conditions related to a
future housing development, and document then in a memorandum of Linderstanding (MOU) prior to
the CDA's acquisition of the parcels. Attached are proposed terms of an MOU for further discussion
and consideration. If the proposed terms of the MOU are acceptable to the City, CDA staff will bring
them to the CDA Board of Comrnissioners for discussion at its April le fleotlfl. CDA staff will also
request CDA Board approval to amend the CDA Board resolution requesting conveyance of the tax
forfeit parcels, to limit the request to the two parcels noted in Table A. Since the CDIN's enabling law
gives the CDA priority for tax forfeited parcels over cities, a revision to the resolution will allow the City
to Iproceed with the requested conveyance of the remaining parcels.
Benefits to the Ci
The MA's proposed acquisition Of the two parcels described in Tab e A provides m ny benefits to the
City, as follows:
The CDA has expertise and demonstrated success in developing or partnering with the private
sector to finance the development of high quality, market rate and affordable housing, and
mixed use developments. This site has been previously approved by the City for a 240-unit
rental development, with 40% of the it affordable to households With incomes at or below
60% of the area median income (AM I), The CDA is best suited and uniquely qualified to oversee
this development in the future,
The City may be able to leverage the Cl acquisition of the housing site to retain the Met
Council LCDA grant ($167000) and build the trail. The City could use the MOO to demonstrate
that the CDA will fulfill the affordable housing requirement of 40% of the units affordable to
households at or Ipelow 60% AIME; and report that the CDA's acquisition of tax forfeit parcels is
authorized by statute for purpose of developing affordable housing,
The CDA will hold property for future development until the market haS absorbed the City
-
assisted 322 market rate and affordable housing units west and north of Kelley Park scheduled
for construction in 2013. If sold at auction to a private entity, the City would not be able to
control the timing of the development.
The CDA is willing to pay a portion of the assessments upfr ant, as opposed to \.> vi ting three or
more years until the property is ready for development.
endation
•
Next Ste
s Reco
If the City/EDA wishes to pursue the acquisition of the tax forfeit parcels in furtherance of the proposed
master development plan outlined in Table A, CDA staff recommends notification of this intent to the
County on or near the May 2, 2012 end of withholding period, To proceed along these lines, the CDA
requires the City's approval of MOU terms acceptable to the CDA Board, along with an amended
conveyance resolution of the CDA Board.
We appreciate the opportunity to work collaboratively with the City to help facilitate the development
of the tax forfeit parcels consistent with City goals and objectives for the Central Village area and the
CDA's mission to improve the lives of Dakota County residents through affordable housing and
community development.
Please feel free to contact me at 651-675-4432 or via email at milers @dakotacda,sta,te.rtinus, or
Andrea Brennan at 651-675-4464 or via email at abrennamodakotacda.state.mn.us to discuss this
proposal in more detail.
Si cerel,
A
Mark Ulfers
Executive Director, Dakota County CDA
End: Proposed MOU Terms
Map A
cc: Andrea Brennan, Dakota County CDA
Bruce Nordquist, City of Apple Valley
pro.osed MOU Ten
Housing Development Project:
The CDA will endeavor to either dvlop, or enter into a development agreement with a private
cleveloper to develop„ a mixed income, high quality, Class-A apartment building on PINS 01-
8170-0001i & 01-03400-28-02 (Parcels E&F on attached Map A), The successful
clevelopment of this site will depend on market conditions, Linknown site condition, a d
financing avilability.
The majority of units will be market rate. Income and it restrictions will be limited to
approximately 40% of the units, if they are affordable to households with incomes at or below
0% of the area median income ($40„300 for a household size of 2 in 2012), OR 20% of the units,
if they are affordable to households with incomes at or below 50% of the area median income
($33,)00 for a household size of 2 in 2012).
The development will meet City design standards for the Central Village area
The CDA will hold property for future development until the market has absorbed the Ciy-
assisted 322 market rate and affordable housina units west and north of Kelley Park scheduled
for construction in 2013,
The CDA inay consider developing workforce housing on the southern na ow p rtion of the
site, depending on financing availability and market conditions.
Assessments:
CDA will pay approximately $1,500,000 within 60 days of obtainin clear title to the property
City will waive interest and penalties, and the balance of principal assessments levied„ pending
and/or yet to be spread.
Tax Increment Financing:
City supports the CDA 1 s establishrneflt of a lousing tax increment financing district, if n ecesSarY
to develop the housing project
Acquisition Cost
CDA commitment is contingent on the Dakota County Board of Cornrnissioneris approval of the
sale of Parcels E & F on the attached map at a cost of $100 or less per parcel,
CDA commitment is contingent on obtaining free and marketable title, not subject to deed
restrictions or reversionary requirements to the Parcels E & F on the attached map.
ICDA Grant or other trail funds:
- CDA commitment is contingent on LCDA Grant availability to construct trail to 155 Transit
Station? or other funding available for the project.
`4,
ftilft *At
153RD ST W
FORTING S
01-03400-020-28
1.
CENTRAL VILLAGE WEST PARCEL DATA
1
City of Apple I ,
Valley
TO:
FROM:
MEETING
DATE:
SUBJECT:
Mayor, City Council, City Administrator
Community Development Department
March 28, 2013
2012 LCDA-TOD Grant Application
H:\Economic Dev. Projects\2012 LCDA-TOD grant\Central Village West Office Building\CC memo032813.doc
EDA
MEMO
Planning & Development Department
Attached for the City Council's consideration is a resolution approving submittal of a revised 2012
LCDA-TOD Grant Application to the Metropolitan Council. The LCDA-TOD program can help fund
land acquisition, public-use or shared-use parking structures; infrastructure connections and
improvements; sidewalks and trails that connect the site to transit; and placemaking functional
elements. No City match is required.
Project Description
In 2012, the City received $866,000 in LCDA-TOD funds for site acquisition of the Commons I and II
property. That project did not materialize. Given the options to either return the funds to the
Metropolitan Council or request the reprogramming of the funds to a different site, staff, with
Metropolitan Council staff support, believes reprogramming is the best choice. The proposed project
by the builder/owner/ employer team would acquire tax-forfeited land in the Central Village West area
for the cost of outstanding assessments, which now total $1,200,000, for the purpose of constructing a
100,000 sq. ft. office building and structured parking on three existing vacant lots. The grant funds can
only be used for projects located within specific transit areas; the Central Village West area is located
in the Apple Valley Transit Station (AVTS) Transit Improvement Area. The City has been actively
working with the builder/owner/employer team to acquire the three subject parcels for the employer
who would occupy the entire 100,000 sq. ft. building.
The potential tenant is a global business services provider seeking to relocate their operations. Apple
Valley is their preferred location. The City is requesting $866,000 in LCDA-TOD funding to assist the
future buyers' purchase of the property. Because the improvements are significant and add to the
future lease costs, the builder/owner states it is extremely difficult to make the site attractive to the
tenant. Though the tenant would prefer to locate in Apple Valley, there are other locations elsewhere
in the United States that are also attractive. Holding down the lease costs and making the site
competitive with other office properties is one of the critical elements to bringing the tenant to Apple
Valley.
Recommended Action:
Staff recommends that the City Council approve the draft resolution authorizing changes to the 2012
LCDA-TOD grant application for assistance with site acquisition.
Authorized contract signatory:
Name:
ar
Hamann-Roland
'oj
TOD Project name
Applicant - a city, county or
development authority
City's application contact
Title
Phone
Email
App 'cation prepared by
Name
Title
Project location
6. Amount requested
Organization
Phone
Email
Will this application pertain to the
entire Named TOD Area or a part of
the Named TOD Area
If this application pertains to a part
of the TOD Area, provide the
boundary streets or landmarks
ntificati
Central Village West Office Building
City
Address
intersection
PiNs
City of Apple Valley
Bruce Nordquist
Community Development Director
952-953-2576
bnordquist clapple-valley.mmus
Title: Mayor
Margaret Dykes
Planner
City of Apple Valley
952-953-2569
mdykes ci.apple-valley.rnn.us
4. TOD Area name and location -- select from the list in Appendix 4. This TOD Area will be referenced
throughout the rest of the application as the 'Named TOD Area."
TOD Area Name Cedar Avenue BRT Apple Valley Transit Station
Entire Named TOD Area
Part of the Named TOD Area
LCDA Pre-Development
TBRA Site investigation
TBRA Cleanup
LCDA Development
Total requested
Northeast of the intersection of Garrett Avenue and 153rd St.
W. approx. 1/3 mile from AVTS.
Apple Valley
Northeast of Garrett Avenue and lS3rd St. W.
01-81750-03-010 is 1.67 ac.
01-81750-03-020 is 2.03 ac.
01-81750-02-010 is 1.64 ac.
SO
$0
SO
$866,000
$866,000
Appl can s should read
Livable Communities 2011
Transit Oriented Development
ant AppIical
he TOD Application Guide before completing this application.
I
OIL
1. Will the Named TOD Area named iri Section I focus on housing or jobs or both
Housing
2. Will the following 'arid use guidelines be in place
7
It*
Local official controls applicable within the Named TOI) Area named in Section I must be generally
consistent with direction given in the Metropolitan Council's Guide for Transit Oriented
Development.
a. Residential densities
At least 30 units/acre for rail OR 15 unitsfacre for
bus or commuter rail
b. Minimum Floor Area Ratios (FAR)
At least 1.5 for rail Q .5 for bus or commuter rail
Jobs
c. Local planning within the Named TOD Area addresses TOD design features
1 See the 2011 TOD Application Guide for exceptions
Both
1. Minimal building setbacks
2. Short blocks with pedestrian connections
adjacent to the buildings
. Optimal pedestrian convenience between the
station and other connecting transit
4. A range of housing densities, types and costs
5 Connections among housing, retail,
employment centers and recreational uses
6. Cycling and walking conveniences
7. Current and future employment opportunities
within the Named TOD Area and within the
connecting transit corridor(s)
. Conservation, protection and enhancement of
natural resources
9. Residential and commercial parking is limited,
shared between uses, located to the rear of
buildings and/or is structured
d. If "Jobs" is checked in #1, above, at least 50 jobs
per acre at employment centers
2
Will be in
place Will not be in
In place within 36 place within
now months 36 months
LI
El
res oi
Ezi
it
3. Equity considerations within the Named TOD Area: the if has adopted a policy plan / guidelines
or official local control to
a. Address both the preservation of existing
subsidized and naturally occurring affordable
housing units in the Named TOD Area AND (one or
more of the following)
The addition of affordable housing units in the
Named TOD Area OR
The addition of higher value housing in lower
income areas to achieve a mix of housing
opportunities
b. Address how the applicant wdl proactively and
intentionally address gentrification
4. The Named Tor) Area planning is consistent with the
city's comprehensive plan.
Se
uir
. The city has adopted the vision, goals, and principles
promoted by the Corridors of Opportunity Initiative,
including the principle of Equitable Development to
provide guidance for strategies and planning along its
transit corridor or at its transit station.
. The proposed TOD Project will have the potential to
enhance the tax base within the Named 'TOD Area.
For evaluation use only: Minimum thresholds met Yes
be in
place Will not be in
In place within 36 place within
now months 36 months
2 See Appendix S: Areas of Minority and Poverty Concentrations
3 The Principle of Equitable Development adopted by the Corridors of Opportunity Policy Board states, that equitable
development "creates healthy vibrant communities of opportunity where low income people, people of color, new
immigrants and people with disabilities participate in and benefit from systems, decisions, and activities that shape their
neighborhoods.' See Appendix 6 or the Co0 website at: ht • w .m trace I. .r tlannin. CO 4111 i& ht
ec
a
In place currently Will be in place within 36 months -
e
I., 7 .
. Has the city formalized TOD guidelines for the Named TOD Area?
Will not be in place within 36 months - C:1
104
T • - of s-
*lions
,874
31
8
1
14
ntn
0
1. List the applicable existing and/or planned uses for the
necessary.
Ac of
existing uses
Acreage to be
retained from
•
Residential
Commercial
Retail
Restaurant
Office
Government/ Civic
Arts/Cultural
Entertainment
Open 1 Public Space
Other (list below):
Vacant 18 32
Church 1
Has the City adopted affordability requirements for housing assisted with City funds in the Named TOD Area?
Adopted 4 Will be adopted within 36 months El No plan to adopt requirements
24100
33.00
88.00
9.00
16.00
31.00
0.00
7.00
43.00
4
241.00
33.00
88.00
9.00
16.00
31.00
0.00
7.00
43.00
0
5
fi Sectio
#Plti - •
2, 695
13
33
8
15
5
0
1
16
0
Do not use ranges - round as
Acreage
designated for
-
262.00
35.00
90.00
9.00
22.00
31.00
0.00
7.00
44.00
0
5
How will the Named TOD Area function as an integrated entity?
a. Describe how the Named TOD Area is designed to encourage its residents and/or employees to live or
work there without reliance on an automobile, meet daily needs through the use of transit or walking, and
reduce automobile ownership, vehicular traffic, and associated parking requirements that would otherwise
be necessary to support a similar level of more traditional developirtertt.
Sidewalks and trails exist throughout the 503-acre Apple Valley Transit Station TIA (the TOD area
The station will provide service to over 1.4 million sq. ft. of existing office, commercial, and retail
uses, and nearly 1,900 residential units within the TOD area for AVTS. The area is already a
compact suburban downtown core densities and uses will increase when the station is operational.
Shared parking plans are in place, and plans are underway to further reduce parking fields and create
infill development where possible. Additional trails and sidewalks are slated to be constructed to
further enhance non-auto connectivity.
b. Describe how the applicant will use TOD design standards to accomplish the goals in question 4-A?
The City completed a study to create land use controls and design standards that will maximize the
development potential of the areas around the transit stations by allowing mixed -use development
with housing densities of 30+ units/acre and development of office buildings with floor area ratios
of .5 and .6. Jobs in the area are currently accessed primarily by cars, but as Cedar Avenue I3RT
becomes operational and higher levels of transit service are provided, more people will be able to
access jobs and housin in Apple Valle Transit Station area.
e
ijL
c ion
5. Describe how jobs and housing are connected both within the Named TOD Area and outside the Named TOD
Area
Sidewalks
4.4
Paths,/ trails
Bike racks
Street
Transit shelters
El Pedestrian waiting facilities
Other
6. Has the City adopted hiring and procurement goals and/or processes that advance and promote the
employment of Local workers and/or disadvantaged businesses?
L Employment of local workers
• In place now
Will be in place within 36 months of the date of award
Will not be in place within 36 months of the date of award
b. 1:::lisadvantaged businesses
El In place now
• Will be in place within 36 months of the date of award
Will not be in place within 36 months of the date of award
c A, system in place to monitor progress toward and achievement of procurement and employment
goals
• In place now
Will be in place within 36 months of the date of award
Will not be in place within 36 months of the date of award
In place along most streets in Downtown connecting existing
housing and businesses to AVTS. Sidewalks are installed as new
development or redevelopment occurs,
In place along Cedar Avenue, County Road 42, and other pricipal
streets providing bikeway access between BRT stops and
employment, commercial and government centers.
The City installed 10 bike racks at several key locations in 2011.
Private businesses are encouraged to install racks, and there are
nearly 1,200 bike spaces in the City.
The City street grid in the area consists of short blocks with
sidewalks providing accessibility for residents and employees.
The Apple Valley Transit Station is an enclosed station; the other
BRT station stops are also enclosed,
5
F s u e es will ; e e ve e e oil a s result o ac v e 5
direct:
Provide a description of the TOD Project.
The future 100,000 s. f. Central Village West Office wilding will be co structed o n two parcels
totaling 3.7 cr es . A 300-space rk will be constructed on an adjacent 1.64-acre lot. The
requested fu d n:g will used to assist in th acquistion of the property in order to make lease costs
competitiveto is estimated that approximately 250 jobs could be created
within the first 12 months d another approximately .:_300 jobs within the following 24-36 meths.
is estimated : that approximately 20% of employees will use the , R BRT to travel to and from work as
a: t of a travel and management strategy to negotiated wit e City. Transit uses possible
because of the compact downtown, and the site's proximity to the Apple Valley Tran sit Station,
which. is 5-to-7 minute walk from : the site. Existing and future businesses in the area will be able to
more readily hire rece college a e veterans, disadvantaged young adults, and retirees those
that - rely heavily on transit services.
Describe the qu Ries this TOD Project that make t a good demonstration that can be replicated in
other TOD Areas These qualities include the TOD Project's design, its compactness, mix of uses, the
anticipated FAR, the functions it provides, how it connects with other functions inside and outside the
Named TOD Area, its financing partnerships, etc.
The site acquisition assistance will allow for a job-creating business to locate near transit on a vacan
. The project site is 1/3-mile fro m AVTS, and existing sidewalks and d trails make the walk easy.
The City and future owner estimate 2 0% of mpl y s will use transit services, reducing t. ,.. e parking
kink
demand for t area. Site acquisition and building construction are being funded with over
mien, in private dollars, as well $2 million in City funding through a proposed d future TIF distric
that will assist the e -- i din owner with construction. Funding from MnDEED through the
IVIiimesota Investment Fund is also anticipated to help assist with equipment Also, MnDEED has
co , fitted. up to $400,000 in disadvantaged workforce training in nds.
Provide a description of the requested grant funded activities: i.e., for what purposes does the applicant
propose to use TOD grant funds?
The LEDA-TOD funds will be used to assist with the acquisition of the vacant sites, which is
currently in tax forfeiture. The property will pass from public possession to a private owner. The
1 grant funds will help to offset site acquisition costs so that the property is competitively priced
to o - roduci n employers with the stated mission of employing recent college graduates, veterans,
disadvantaged young adults, and retirees. By locating so close to the Cedar Avenue BRT line, future
employers wii : benefit from. transit services, and the 13RT line will have a stable ridership pool.
4. Jobs Describe the jobs that will be created as a res of his TO
Type
Housing
a. Housing Current/ xis ng 0 per acre
density/ Planned 0 per acre
l rof s ion 1
Office
Select
Select
Select
Select
Current housing: figusing type . l Rent "eye l A#
None Select 0 AMI
Select Select O /4 AMI
Select Select 0 /
Select Select ° Al
Select Select M
Describe the proposal's rale In producing or presenting affordable housing within the Named TOD Area.
No C si ng is part of the proposal, but 188 affordable units owned and managed by the Dakota
County C . are adjacent to the site. Another r 322 units will start in Spring 2013.
Indicate the type(s) of housing planned for the Project.
1. Planned multi-family rental market rate units
housing in affordable units 0 % AMI
affordable units 0 % %% AMI
2. Planned m ail ownership # market rate units
housing affordable units /0 AMI
AMI
affordable units fo
- -- Planned townhouse or row house #market rate units
AMI
affordable units ty
• affordable units 0 ° %a AMI
Planned single family hornet " .... market rate units
• affordable units 0 °/0 AMI
• affordable units % AMI
.„ „ .. w . senior housing # Carle rate uni s
affordable unit 0 0 AMI
. . # affordable units %% AMI
Affordability mechanisms No housings proposed with this project. There are nearly 1,900
to be employed residential nit within 1/2 mile of the Apple Valley Transit Station
ranging from single family houses to high - density senior.
Sec o u c ire: • + ► € r � a
r c • c
2010 Housing Performance Score
or Metropolitan Counci use only
the ., Project Area be
visible from the station area or
at r ?
Is the TOD Project area
within the boundaries of
or subject to a TOD
area, rieighbortiood,
corridor or other similar
plan adopted by the
municipality i h c
the TOD Project is
located?
No If yes, name of plan:
Yes The City has completed the Cedar Avenue BRTOD � plan and is now
working on the implementatiort strategy.
Type of play.
TOD plan
Is this Project consistent with the p a Yes
If no, explain:
St tus 0 site con
for (describe)
Other. The site is m tax forfeiture and mus t be acquired.
Status of property ownership? Other
What is the expected closing date?
6/1/2013 me thiyear)
Status of the site plan Concept plan
Explain
The owner has retained an architect who i s now workin on building plans
for the renovations. The plans are expected to be submitted to the City for
approval by the end of 2013.
Describe the TOD Project's ability to be catalytic in attracting private sector investment.
The requested flooding of $866,000 will help leverage nearly $19 million in private funding for site
acquisition, . building construction that will come from the future building owner and the future
tenant The 100,000 sq. ft. 2-story office and headquarters will house 550 employees. The nt i
Village st location was selected by the employer because of the ro i it to AV ' . Workforce
studies done by the employer estimate transit ridership in the 2 0% range. "But For" transit availabili t ,
the e • coyer would not locate at the subject site.
Development
activities
Development area within Named TOD Area fully identified
Current conditions in the developmerit area have been
assessed
pr cam .let:ed
Concept planning completed
Specific development T013 Proect has
TOD Proect feasthility studies completed
Alternatives analysis completed
Detailed desim! plans completed
Financing options identified
en identified
Site control achieved
Any races chap es to official controls secured
Phase 1 environmental assessment completed
Phase II environmental assessment completed
If necessary, Response Action Plan approved by MPCA
Site *Ian completed
Stormwater mane, ement plan completed
All necessary approvals secured
If necessary, demolition completed
Site gradiris completed
Construction started
re ion a s r o f act
Expected
completion.
date
Expected
completion
date
elivere
Section a spe cific outcomes wi
directi associated w ith the o d
12. TOD Project status: Check the boxes below to indicatfe all COMPLETED TOD Project milestones:
Pre-
Development
activities
9
9/30/13
C:om IpFtf
Section Lt sit
4.
ic
Has the applicant identified the site to be acquired? D N
Yes
If acquiring this site, will the applicant have 100% of the and necessary to commence this development?
No OA Yes
0 10
If no what percentage of the and necessary to commence the TOD Project will this accomplish?
Will all of the parcels for which ftirldirig is requested be acquired within two years of the date of award?
No Yes
0141
Is the purpose of the application to reimburse another entity for property acquired within the twelve months
prior to the date of award (NOTE; Conditions apply — see Application Guide)
No 0 Yes If yes, identify the entity to be reimbursed:
TOD funds may be used only to finance the independently-appraised value of the property as appraised
within six months of the date of the grant application. Will the purchase price exceed the independently
appraised value? ii No [:,1 Yes
If yes, describe now the land value was established:
Will the requested grant funds cover the total cost of the property? No 0 Yes if no, what is the
percentage of the total cost of the property financed by the requested TOD funds? 72
What other sources of funding will be used to acquire the property, if any? (Must appear in Sources & Uses.)
Other Public Resources See Sources and Uses detail.
ec
Comple
applicat
. Site history: describe the previous uses of this site, the contaminants of concern at the site, how the site
likely became contaminated arid prior attempts at redevelopment:
a. Previous uses:
b. Contaminants of concern:
c. Likely contamination cause:
d. Prior cleanup attempts:
2. Size of contaniinated area in acres:
acres
10
TOD Funding Request Workshee
ant -Funded Ac.MMtt e
Conduc
n r
kshops
development e
eras
ves
edev pm nl
station
re
plans
corridor 0
Dove p zoning and land use i
ntal
ple
tools
Analysis dl: alternatives
onomic leasibilit , or for
ar
n lx„ land use ITliX,
e ater or energy issues
�atl tl ng to determine
sbie I�
nd uses
a spec!
site
67 @G
ce
:er
c SU
anamn
r
ns
Developr
Determining
ra egles for and banking and
and
on
a l
he
a of a
on after
and
isition up to
PPlicetion
:a
ppl
onths pr
: tion due
ri costs
tcnca
or:
onduc ng Phase
e i
lrc nrn r tal
asbe t€ s abate
reparation o
andaIrds
plans the
AN
RA
ad-based paint abatement plans
ion
agate
gent a r
taro e
stos removal
or encapsulation
- based pa nl
ernova
iz
or stab!
on
Asbestos and/or lead -based pa
abatemen
p er lition and removal of obsolete structure T :
contaminated areas only; LCDA: non contaminated areas
only)
nated areas
Grading n and soil correction TB cant,
only; LCD A: non -c n amin ted areas
Excavation, transports long dispos l fees for removal of
contaminated of , backfill and !ceding of clean soil
:h clean fill
reel
acktll
ce con
nated fill
vapor
Sol
ga on
Costs o document environmental monitoring systems
successful implementation of (e.g,, technical nical writing)
New or relined stree
sidewalks and benches
e rig lightin and si n
cruse or ba
Pubi
use parking s
° ucture s
Ex di tc
telecommunication #ins
:er or
local public sewer,
tb
c connecting elements, including sidewalks and trails
connect to transit and other surrounding pudic places
I e- integrated trans
bridg
t shelters, per
an-en bike r
c1
or
or
an
gent i
iprovem nt
cern king fund
oval elements
Design and engineering for LCDA Deve
Items
pn erst t TOD
I ible
on
Pro
ccoordiral
LCDA Pre -
top
TOD
Investitia
TOD
�,... up
TOD
LCDA
D velopment
1
866,000
U
0
chart
chart
AERIAL
CENTRAL VILLAGE WEST OFFICE SITE ACQUISITION
2012 LCDATOD Revised Application for Apple Valle
g*)nd
Central Villa a West Office Parcels
TIA Boundary /2 Mil AVTS
Half Mite Radius 'T
Cedar Ave BRT Transitway
Apple Valley Tr ani f fio
CENTRAI
Cen r l 1
Office 31
HD
Apple Valley Transit Sta tion
IN
Half Radius adios AVM l
TIA Boundary- 1/2 Mile
Central Village West Office Parcels MIX
2030 Land Use Plan PARK .
COM , V a er
f!t fi. �.5!$t?9 ttl lSf�ll�it�fl�tl'�!$1
�71Etill.11016C x., ,.41St[7Y11
AREA PLAN
VILLAGE WEST OFFICE SITE ACQUISITION
2 LCDATOD Revised Application for Apple Vall
SITE PLAN
CENTRAL VILLAGE WEST OFFICE SITE ACQUISITION
2012 LCDATOD Revised Application for Apple Valley
0:1 2 0.3
Legend
IN Apple Valley Transit Station
Central a e West Office Parcels
Sidewalks
Trails