Near border of Minneapolis and St. Paul, Dominium plans yet another apartment project

With its strategic location between the two downtowns and the addition of the Green Line light rail, St. Paul's Midway area is quickly becoming one of the go-to locations for new apartment development. Now, there's yet another proposal for the area: a "workforce housing" building just steps from the transit line's Raymond Avenue station.

Dominium Development, the Plymouth firm that last week revealed plans to build up to 700 new apartment units on the west side of Hwy. 280 near the Green Line's Westgate stop, this week confirmed the planned redevelopment of the former Hunt Electric industrial building at 2300 Territorial Road on the east side of the highway.

Approximately 216 units of affordable workforce housing would be built on the site, pending a hoped-for rezoning of the property from industrial to residential uses.

Patrick Ostrom, an associate at Dominium, said the company has a purchase agreement for the building, which Hunt Electric vacated earlier this year.

The spot is just behind the Carleton Artist Lofts, which face the Raymond Avenue station along University Avenue W. It's also situated on the same block as another recently revealed redevelopment effort: the Raymond at Carleton Place, which would provide 79 "micro-units." If they are approved, the two projects would turn the St. Anthony Park neighborhood block into a major new hub for affordable housing at a time when rents are rising across the Twin Cities.

"Our proposal is to demolish the existing [Hunt Electric] building and build four stories of affordable workforce housing," Ostrom said.

Although the Territorial Road redevelopment is not connected to Dominium's much-larger plans for the 13-acre former Weyerhaeuser lumberyard site across Hwy. 280, the appeal of both projects is the same: the easy access to employers in both St. Paul and Minneapolis provided by the Midway's location.

"We feel it's a very good market for housing," the developer said. "That stretch [along Territorial Road], especially, is a good fit."

If it is eventually approved, the workforce housing would join the Carleton Place micro-units and the expansion of the C&E Lofts as new housing construction around the Raymond Avenue station.

The financing of workforce housing remains tricky and is one of the main reasons more of it isn't being built, despite a need for 37,000 additional affordable units by 2030 to keep up with the growth of the region's low-income workforce, as estimated by the Metropolitan Council. Two-income households, with both earners working full time at minimum wage, are finding increasingly fewer options. The proliferation of new market-rate units and tight vacancy rates are pushing average rents higher.

"Construction costs also keep rising, and this is making it hard to keep rents in new buildings down to affordable levels and still make money," said Gina Dingman, president of NAI Everest in Golden Valley. "And if the rents aren't high enough, it's tough to get bank financing."

The Midway area, she agreed, is eminently suitable not only for workforce housing, but all kinds of multifamily development.

"That's apparent because demand there seems to be very high and the developers are aware of that," she said. "I know a lot of them were interested in the Weyerhaeuser site for a long time."

Don Jacobson is a freelance writer based in St. Paul. He is the former editor of the Minneapolis-St. Paul Real Estate Journal.