The Minneapolis/St. Paul market isn’t the only area in Minnesota that’s in the middle of a commercial construction boom.
Consider Baxter, Minnesota. Though this city in Crow Wing County — about an hour-and-a-half drive Northwest of the Twin Cities — boasted a population of just 7,610 as of the 2010 Census, it’s been steadily growing since. And commercial developers have noticed.
An Aldi supermarket celebrated its grand-opening Dec. 3 in Baxter. The community is already home to busy Gander Mountain, Walmart Supercenter and Costco Warehouse locations.
Now HJ Development is ready to add to the commercial mix here with Central Lakes Crossing, a retail center planned for the intersection of Highway-371 and Glory Road South in Baxter. Plans call for up to 150,000 square feet of junior box space and 30,000 square feet of small shop space.
Chris Moe, partner with HJ Development, said that the time is right to tackle such a development in Baxter.
“You have a lot of people here with secondary homes that spend a lot of time in the Baxter area,” Moe said. “You have people with higher incomes who live up there on a seasonal basis. I think of this area as Main and Main for Central Minnesota. It draws from a large population base.”
Moe says that big box retailers – such as the Walmart Supercenter, a Target and the Costco – have already proven that they can thrive in the Baxter area.
HJ Development’s goal with Central Lakes Crossing is to add junior box tenants to the market, in addition to fast-casual restaurant.
“We’d like to bring some national names to the development that aren’t currently here,” Moe said. “We think this development and this location will be perfect for that kind of retailer.”
Moe and his fellow HJ Development brokers are busy talking with sporting goods and pet-supply retailers. They are targeting beauty supply stores, fast-casual hamburger chains, bakeries and any other retailer that would be a good fit for Central Lakes Crossing.
“We have generated a lot of interest already in this project,” Moe said. “We are working on several proposals. We don’t have any signed deals yet. But we are getting closer to that.”
The Baxter area – and its surroundings – are like much of the rest of Minnesota: busy. Moe said that vacancy rates in the retail sector here are low.
And the expectation is that demand for space at Central Lakes Crossing will be high, too. The land that HJ Development is developing is in the heart of Baxter’s retail corridor.
“There is not a lot of existing vacancies in good well-positioned spaces here,” Moe said. “The land we have is in the mix of everything. If you are a retailer who wants to be in this market, you are most likely going to be looking at a ground-up option. That is what we are offering.”
Moe says that construction on Central Lakes Crossing should begin in 2016, with the first stores opening here in early 2017.
According to Moe, junior box tenants are now willing to pay enough money to justify the costs of new construction, especially in markets as strong as the Baxter area.
This is a change: In the recent past, junior box retailers generally targeted retail space that had already been vacated by other tenants.
“It’s been a long time since any real new construction has taken place in this market,” Moe said. “Not a lot has been added. There’s been an Olive Garden, a Discount Tire. The larger box tenants have been here for quite a while. They’ve all performed well.”