Howard Bergerud, who has developed hundreds of Walgreens stores across the country, plans to develop a six-story building with 150 apartments atop first-floor retail space on a block bounded by 2nd Avenue N., 1st Street N., 2nd Street N. and 1st Avenue N. The 1.6-acre project also includes three century-old brick buildings that Bergerud has acquired and plans to rehab into offices and retail. The project is being called the Foundry.

"It should become a very charming street," Bergerud said.

The block is part of the Warehouse Historic District's Nineteenth Century Warehouse Area, where the buildings tend to be narrower and shorter — mostly two to five stories — than many of the larger and taller warehouse buildings that were used for storage and manufacturing.

The existing buildings haven't traded hands for decades and Bergerud said that he's been negotiating for several years to acquire them. With buyers paying record prices for properties in the North Loop, the competition has been fierce. County records show that in late October entities associated with Bergerud paid $2.1 million for a small two-story building at 121 First St., which the county values at $631,000. He paid $7.36 million for the parking lot, which the county values at $1.71 million.

The building at 125 1st Street N. is an 1884 brick building that shows its age. Known as the Commutator Brass Foundry Co., it's been converted to offices and retail. The art gallery and boutique that are in that building will stay, but one of two old sheds adjacent to the building will be demolished. One of those structures will be restored, including a smokestack that is perilously tilting toward the sidewalk.

As the neighborhood has been transformed by warehouse conversions and apartment and office buildings, this block has remained largely unchanged for years. It's anchored by the Aria Events Center, an imposing Gothic building that was designed by Cass Gilbert, who designed the Minnesota State Capitol. And it's home to the Alliance Française, which has been a mainstay on the block for decades. Neither of those buildings are part of Bergerud's plans.

Bergerud is a veteran in this part of the city. He was part of the partnership that transformed the historic Whitney mill building into a boutique riverfront hotel in the mid-1980s. Just upriver, he partnered with Paul Klodt to develop the Riverwest Apartments overlooking the St. Anthony Falls spillway. Both buildings have since become condominiums.

Bergerud is president of Twin Cities-based Semper Development, which has developed at least 300 Walgreens stores across the country. Semper is not involved with this project, but because of Bergerud's connection to the company, there's been speculation that the drugstore might fill one of the three retail spaces in the new apartment building. Bergerud said that's not the case, but didn't rule out the possibility that a Walgreens might land elsewhere in the area; he's negotiating on other properties in the neighborhood. He hopes to announce a tenant that will occupy half the space during the first week of December.

"Everyone is going to like the tenant but it's not a restaurant and it's not a Walgreens," he said.

The block is near some other active redevelopment. The 101-unit Velo Apartments are across the street, and Ryan Cos. is putting finishing touches on the Maverick, a sprawling rental project that's owned by San Francisco-based Shorenstein Properties.

Though thousands of new apartments have been built in the area, construction has slowed considerably. Right now there are only two market-rate apartment buildings under construction in the North Loop and two more in the pipeline, not including the Foundry.

Mary Bujold of Maxfield Research said that new buildings have filled quickly, suggesting there's room for more. But there appears some softening in demand for apartments that rent for more than $2.50 per square foot.

The area is already known for its popular restaurants, including the Bachelor Farmer and Spoon and Stable, but DJ Heinle, co-chair of the North Loop Neighborhood Association's planning and zoning committee, said the area needs more service-oriented retail. The group has advocated the addition of a sandwich shop, health clinics, dental offices, a dry cleaner and laundromat.

Jim Buchta • 612-673-7376