Arctic Cat relocating corporate headquarters to Minneapolis' North Loop

Arctic Cat is moving to the big city.

The maker of all-terrain vehicles and snowmobiles is relocating its headquarters from Plymouth to a larger building in Minneapolis' North Loop neighborhood to prepare for future growth, officials announced Tuesday.

Arctic Cat is leasing the old Western Container Building at 500 N. 3rd St.

Ned Abdul's Swervo Development Corp. will renovate the 107-year-old building to Arctic Cat's specifications, including adding two glassed-in floors to the current four-story brick structure.

Abdul said in an interview Tuesday that renovations will cost about $5 million to $7 million.

He also said that Arctic Cat's 13-year lease evolved and was finalized "in the last 30- to 45-day period. It was fairly quick," Abdul said. "Their new management has a vision and wants a different environment and different feel for their employees, and so we are excited to help them attain that."

Arctic Cat, which plans to increase headquarters staff from the current 35 employees to 150 to 200, will be the sole occupant of the building. When renovations are completed next summer, the location will have 55,000 square feet of space. The Plymouth space that the company rents now has 11,000 square feet.

The increase in staffing will include some people relocated from the company's Thief River Falls and St. Cloud locations and an unknown number of new hires, Arctic Cat said.

Arctic Cat CEO Chris Metz said in an interview with the Star Tribune that the relocation was necessary because the company is determined to grow significantly over the next few years. The Plymouth office is "at capacity" and "unable to meet the future needs of the business."

Metz said the company wants to increase revenue by 50 percent to $1.05 billion by 2020.

He said the Minneapolis location should make it easier for the company to recruit engineers and product development pros as well as other executives and administrators.

"We have butterflies in the stomach, but this is exciting," said Metz, who told employees about the move Tuesday. "People are realizing that for us to be able to grow and compete on a global basis, we need a more global footprint that allows us to attract diverse business, and a diverse workforce. We think this is a step in that direction."

Metz, who joined Arctic Cat in November, is determined to call attention to Arctic Cat with previously untapped marketing and design efforts. Since joining the firm, he has had products showcased in the Plymouth executive lobby. The conference room displays large platinum etchings that depict riders zooming atop Arctic Cat products.

Asked what he'll do at the new location, Metz joked: "It is going to be just short of having machines leaping off of the building. But it will be fun."

In 2009, Arctic Cat moved its executive offices to Plymouth from its main Thief River Falls facility, where the company still makes recreational vehicles.

The move to Minneapolis will not affect production in Thief River Falls or the plant in St. Cloud.

Both of those factories are being expanded as part of a $27 million upgrade that is slated to receive some state assistance. State assistance was not sought for the new Minneapolis location.

The developer is footing the cost of the build-out, officials said. Swervo Development is the same company that bought and is rehabbing the Armory near Minneapolis' planned Downtown East Commons. Swervo went to court in 2009 to win permission to make certain physical changes to the historic Western Container building. Abdul said he considered using the building for a mix of residential and commercial, but is now excited to go with Arctic Cat's commercial needs.

Arctic Cat's new presence in Minneapolis will give it a higher profile than its current hidden office space on the 10th floor of a Plymouth office park building.

"The Minneapolis North Loop is a historic and trendy warehouse district, making it a terrific complement for our iconic brand," Metz said. "This desirable and up and coming area is near a host of urban amenities and it offers easy public transportation and a central Twin Cities location that will help us attract talent as we grow. We are excited. This building is going to look pretty cool when it's done."

The corporate relocation is the latest shot in the arm for Arctic Cat, which has struggled since the Great Recession to make a profit and grow. Metz said the company is focused on returning the company to profitability and growth by 2017.

The new Minneapolis location will house the product development team working to increase sales of Arctic Cat's side-by-side vehicles, Metz said.

Dee DePass • 612-673-7725