Changing Minneapolis puts squeeze on industrial land

Broom and sheet metal factories have been reborn as condominiums. Religious paintings and pews adorn a former printer warehouse. Children frolic in a charter school, recently a roofing company.

For a city built historically on industry, that kind of enterprise is getting harder to find these days in Minneapolis.

The city's economy is booming as more people choose urban living and employment, but job figures and property values show that industrial activity has fallen behind — even as it remains healthy in the suburbs. The trend, echoed in St. Paul, is driven by lack of space, high land costs and the obsolescence of older buildings for modern manufacturing and warehousing.

"That building had a freight elevator in it; I believe the serial number was a two-digit number," Steven Garlock said of his box manufacturing company's former home on 40th Street and Hiawatha Avenue, now slated to become up to 80 apartments. Garlock sought new space rather than bring the 1926 building's elevator up to code, and ultimately moved his 30-plus employees to Eagan this year after failing to find a suitable warehouse in Minneapolis.

It is part of a complex dilemma for 21st-century cities. Expansive modern industrial buildings with large parking lots are a poor use of valuable urban land, and reuse of older ones has also brought new vitality and residents to formerly uninviting areas. Yet it has sometimes come at the expense of well-paying blue-collar jobs, often accessible to people without a college education.

Industrial jobs have been hit hard by globalization and changing business models, but the suburbs fared better. State jobs data show that manufacturing and wholesale trade employment in Minneapolis and St. Paul has fallen 38 percent and 41 percent since 2000, respectively, compared to just 13.8 percent in the rest of the seven-county metro area.

The suburbs employ six times as many people in those jobs (about 210,000) as Minneapolis and St. Paul. But across all job categories, suburban employment is only 2.4 times that of the two inner cities.

That evolving urban character is evident in property values. Industrial property constituted 8 percent of Minneapolis' tax base in 2002, following state rate changes. Today it is just 4 percent, a number that fell steeply last year after assessors determined that several once-industrial buildings now housed commercial activities — like a call center. The city's overall tax base is growing, however, thanks to apartments, commercial and residential properties.

Perhaps the most obvious transition has been the city's North Loop, where the high ceilings and exposed brick of old warehouse buildings now command top dollar as housing units. Those historical, multistory buildings are less practical for many modern industrial uses. But even newer industrial buildings elsewhere in the city have found a new breed of tenants.

Ethiopian and American flags now stand side-by-side on the corner of 26th Street and Minnehaha Avenue, where an Ethiopian Orthodox Christian congregation has just transformed an information technology company's building into a worship space. Its warehouse is now a carpet-covered sanctuary — ringed with hallways and facing east for religious reasons — and former storage areas have become Sunday school and baptismal rooms.

"The advantage of [creating] a church from scratch is you can do it the way you want," said Demissie Kebede, the vice chair of the parish council, standing in front of the new altar.

Corey Tansom put the 24,000 square-foot industrial building on the market after a Bloomington-based firm bought his company, Imaging Path. Seven of the nine offers were for religious uses. "It was just absolutely bizarre," he said.

Across the street in this industrial corridor, meanwhile, the city has spent years trying to find a buyer to construct a new industrial building on a vacant, city-owned lot. They got just one response after seeking proposals last year, but it was rejected since it was largely retail. Beside that is a charter school that recently moved its K-4 classes into the former home of Allweather Roof, after that company moved to Golden Valley.

The city tweaked its zoning code in 2009 to bar K-12 schools from moving into industrial districts, after at least 11 schools had already done so.

Landlocked

The last major study of Minneapolis' industrial properties, in 2006, found the amount of industrially zoned land in the city decreased by 18 percent between 1990 and 2000, while it rose substantially in many nearby suburbs.

"If somebody wants to expand or wants to increase their hiring potential … a lot of these businesses are really landlocked," said Mary Bujold, whose firm Maxfield Research helped lead the review. "And where do they go?"

It's also more expensive to buy or rent property in the city, making suburban locations more economical.

Rather than dirtier businesses like asphalt production, Bujold said, modern industrial activities typically involve light assembly, construction, distribution and component part or medical technology manufacturing. Many of those businesses want to be in the city to take advantage of public transportation, proximity to vendors and a strong labor force, she said.

The smaller buildings that don't make the cut are sometimes inhabited by more offbeat creative manufacturers, such as the honey maker and designer of willow-branch children's playhouses who share a building on Minnehaha Avenue. "That's usually what we end up with, is smaller users doing funky things," said Brian Miller of the nonprofit development firm Seward Redesign, who focuses on the Longfellow area.

Riverfront

The future of industry along city's northern riverfront has commanded much attention in recent years, particularly after the closure of the Mississippi River locks earlier this year. That has ceased barge traffic to a scrap metal recycling business and a construction materials operation, as well as the city's soon-to-be-shuttered port.

A long-term plan for the upper river area envisions more green space, housing and business parks occupying what is now industrial land. But the plan was updated in 2013 to include more industrial uses in the long-term vision for area, though largely not alongside river itself.

Two businesses in that area, backup power supply company DC Group and HVAC manufacturer Unison Comfort Technologies, are expanding.

On the other side of the river, steel furniture manufacturer Bell Manufacturing is leaving Golden Valley for a building near 37th Avenue once used for commercial printing.

Bell co-owner Judy Bell said the proximity to bus lines was a big draw, though it was a rare find. "A lot of the industrial has been kind of squeezed out of the city," she said.

Eric Roper • 612-673-1732

Twitter: @StribRoper