Evolving with market demand isn’t always a given for companies or municipalities, but when a decline in office attendance threatened a Minnesota project, both the builder and the city came together with a plan to attract tenants that would benefit the landlord and neighborhood.
Developers of the Boulder Lakes Business Center at 635 Loan Oak Road in Eagan, Minnesota, first approached the city looking for a zoning change for the property when the sluggish office market looked like it might threaten the viability of their most recent project.
City officials in Eagan were initially skeptical of the appeals to convert zoning on the 11.18-acre site from office use to a business park that might be more useful to manufacturing, engineering and life sciences companies. Eagan officials were looking to attract high-paying, white-collar office jobs and worried a zoning change would only attract companies looking for a distribution warehouse where workers would be paid far less.
Eagan was already a “high-finish market,” meaning developments needed to be at least 15% finished space, but officials — also aware of lagging office attendance — agreed to rezone the site if the developer, United Properties, agreed to reserve 25% of each tenant’s space for office, lab, manufacturing or assembly purposes.
The developers understood that the new requirements would limit their prospect pool but were confident in their ability to find suitable tenants and within 30 days of the building’s completion, representatives from Transwestern brokered a full set of three leases.
More than 40,000 square feet went to First Impression Group, a printing and marketing company specializing in logistics and consulting. A 65,000-square-foot lease was signed by Winsted Company, a Minnesota-based ergonomic office furniture business aimed at technical control room solutions. And the remaining 32,000 square feet was snatched up by a medical equipment company.
The property was selected as the winner of the 2024 CoStar Impact Award for commercial development of the year for Minneapolis/St. Paul, as judged by a team of real estate professionals familiar with the market.
About the Project: The zoning and use transformation of Boulder Lakes Business Center paved the way for other office-to-industrial projects that are now underway in Eagan, including a 177-acre campus for media company Thompson Reuters. Another development in nearby Plymouth will likewise be converted into a 76-acre campus for insurance company Prudential Financial.
What the Judges Said: "Blew the competition out of the market!" said Joe Conzemius, vice president, CBRE. Andrew Babula, director of the real estate program and the Shenehon Center for Real Estate at the University of St. Thomas, said the development demonstrated an excellent partnership between the developer and the city.
They Made it Happen: Mike Salmen and Nate Erickson led marketing efforts for Transwestern; Connor McCarthy worked on behalf of developer United Properties; and Jeremy Thomas represented R.J. Ryan Construction.