St. Paul riverfront development plans face hurdles

Three fresh proposals calling for everything from apartments and offices to hotels and housing have emerged for the former West Publishing site in downtown St. Paul, but it remains to be seen if any of the latest plans can succeed where others have failed.

For starters, the pitches from Los Angeles-based AECOM, the team of Minneapolis-based Sherman Associates and Bloomington-based Frauenshuh Inc., and the Prairie Island Indian Community could face resistance if they need public money.

Moreover, all three proposals call for hotels and two of them include offices, which could be risky in a downtown St. Paul market with increasing competition for hotel guests and a glut of empty office space. Still, the apartment sector remains strong in downtown St. Paul with a vacancy rate of 3.8 percent as of the second quarter, according to the latest Marquette Advisors Apartment Trends report.

The proposals:

• AECOM would build apartments, offices, a hotel, public realm improvements and parking.
• Sherman and Frauenshuh envision a mix of offices, apartments, a hotel, retail, public spaces and parking.
• The Prairie Island Indian Community wants to build a 140-room Treasure Island hotel.

Proposals have come and gone in recent years for the 5-acre development site, which overlooks the Mississippi River at 50 W. Kellogg Blvd. The riverfront location and nearby amenities are considered a big plus. But it also sits on a steep bluff, which presents challenges.   

Ramsey County has spent $17 million on demolition and other work to groom the site for development. At least one county commissioner said talks about additional public money would be “sensitive.”

Ramsey County Commissioner Jim McDonough said the county has “made it clear” to any prospective developers that it has already invested heavily in the site. Any discussions about public subsidies will be “a sensitive part of the conversation, but an important part,” McDonough said.

“I feel strongly this is a very attractive site and we will be looking forward to what developers think the market can bear there,” McDonough added.

Rafael Ortega, another Ramsey County Commissioner, said all three plans are “very good proposals.” But Ortega said he needs more information before committing to any of the plans or any requests for public subsidies.

“No one has put any numbers in front of me. I am not going to consider anything until I know what I am supposed to consider,” he said.

Phoenix-based Cardon Development proposed a $225 million mixed-use development at the site in 2017, but the county and Cardon agreed to ditch that plan after the developer said it needed public money for a parking structure.

Ortega said Tuesday that the Cardon group wanted “a huge amount of money” for parking. “That is not in our vision,” he said. “This is a prime piece of real estate on the river, and I’m sure the (county) board is not out to build parking ramps.”

The county has not released details about any of the three development plans, but more specifics are expected to be revealed at a County Board workshop meeting in mid-November.

Representatives from Sherman Associates and the Prairie Island Indian Community didn’t return phone calls seeking comment on Tuesday.

AECOM’s plans include about 300 market-rate apartments, up to a 200-room hotel, and splashy public realm improvements that would connect the site closely with the river, said Brian Dusek, managing principal at AECOM’s Minneapolis office.

Two office towers would follow in the second phase. Combined, the office towers could range from 500,000 to 1 million square feet of space, Dusek said.

The public spaces set the AECOM proposal apart, Dusek said. In AECOM’s case, the public spaces would more closely connect to the river in accordance with the city’s vision for the site, he said.

The development site is atop an 80-foot bluff overlooking the Mississippi River. Images submitted by AECOM show a new paved public walkway extending from Kellogg Boulevard at the top of the bluff to the edge of the river.

As of the second quarter of 2018, the office vacancy rate in downtown St. Paul was 23.2 percent, according to the most recent CBRE Marketview Report.

Though the downtown St. Paul office market is challenging, AECOM’s hope is that the first phase would bring additional traffic to the site to create demand for the offices in the next phases, Dusek said.

AECOM is still determining how much parking it would need. But Dusek said it would be significantly less than the 2,500 spaces proposed by Cardon.

“Our parking would be right-sized to what the need would be for the site,” Dusek said.

On the hotel front, all the proposers would face competition from new projects in the pipeline. More than 500 new hotel rooms are in development or under construction in downtown St. Paul, according to Finance & Commerce’s online Hotel Development Tracker.

The city had an existing supply of 2,594 hotel rooms as of April, according to Tennessee-based STR, which tracks hotel development. That’s up 13.6 percent from April 2016. Put another way, the city has added 311 rooms in the past two years.

The average daily room rate for 2017 was $132.77, down 1.9 percent from 2016, according to STR. The occupancy rate was 59.9 percent.

“By itself, that is not a particularly strong occupancy number,” Bobby Bowers, senior vice president of operations at STR, said in a June interview. “You had some increase in supply, and demand didn’t keep up.”

Whitney Clark, executive director of the Friends of the Mississippi River, said any new development should offer vertical connections from the bottom of the bluff to the top and respect the river from a building height and massing standpoint.

“The old building was not a tall building, but it created a real wall between downtown and the river,” Clark said.

Ramsey County spokesman John Siqveland didn’t speak directly to the new plans, but he indicated that more information would be out in November.

“We continue having very robust conversations with developers and partners about transforming the Riverfront Properties site into a premier development that is a long-term landmark asset for downtown and the broader community,” Siqveland said in a statement Tuesday. “Project staff are looking ahead to presenting the results of those discussions as a recommendation on a development proposal for the site in the public County Board workshop which we expect to be held on Nov. 13.”

• Ramsey County seeking fresh ideas for riverfront site
• Finance & Commerce Hotel Development Tracker