Community begins to weigh in on Sears site near downtown St. Paul

An evolving proposal to redevelop a 14-acre site that includes the former Sears department store on the outskirts of downtown St. Paul is beginning to get community scrutiny.

Preliminary redevelopment plans for the site were heard last week by building owners and city planners who hope for new housing but worry that any future offices could inflame already tense competition for office tenants.

The site, which includes a nearly 60-year-old Sears building that closed in January 2019 is on Rice Street, a stone's throw from the State Capitol building. The expansive surface parking lots acts as a gateway into downtown.

The June 23 review by downtown building owners of the "aspirational" site plan comes just three months after the property owner, New York-based Seritage Growth Properties, submitted its preliminary redevelopment plans to the Capitol Area Architectural and Planning Board (CAAPB).

The newest proposal is the latest of many redevelopment ideas that go back a decade.

The most recent plans were put forward in 2019 by developer Kraus-Anderson Construction (KA). But those plans fell apart last year, and KA is no longer involved in development talks, KA officials said.

Seritage's predevelopment plan calls for a mix of multistory apartment and office buildings that would surround a central park. It also calls for the restoration of nine city streets that were eliminated about six decades ago in favor of commercial development.

Peter Musty, principal planner and zoning administrator at the Capitol Area Architectural and Planning Board, presented a rendering of the mixed-use master plan during a virtual meeting Wednesday with Ramsey County property managers, downtown business leaders, Kimley-Horn engineers and members of the Greater St. Paul Building Owners and Managers Association (BOMA).

The final configuration, type and number of buildings and parking options could change greatly depending upon public input and future surveys and market studies, said Kimley-Horn engineer Will Matzek, who is representing Seritage in the planning process. "We are still just in the planning stages," he said.

Musty emphasized that progress is likely to be slow. Demolition will not begin this year, and "It will be at least two years to start any development. That is how these projects go," Musty said. "Keep in mind that the Ford [factory] site [in Highland Park] took eight to 10 years" to start developing.

The site still must undergo an environmental assessment and key questions must be addressed about density, parking, street restorations between Marion and Rice Streets, as well as transportation, and how any office redevelopment can be "complementary" to downtown businesses rather than competitive.

The June 23 meeting of stakeholders is just "the start of many conversations that Greater St. Paul BOMA will have about this Sears site," said Joe Spartz, president of the Greater St. Paul Business Owners and Managers Association (BOMA).

The Sears site is particularly complex because it has 24 "stakeholders" and is known to be "an area of concentrated poverty," Musty said. So while "we hope this moves efficiently through the process of community listening, there could be some developments within three to five years, but who knows how fast it will go after that."

Some on last week's call voiced optimism that the plan might generate affordable housing options or "extended stay" residences for politicians and staffers working at the State Capitol. Musty noted that it was likely that the bulk of the development could focus on housing options, but said retail and "a little bit" of office is also possible.

Several building owners told Musty and government officials that the pandemic caused tenant vacancy "challenges" in their downtown investment properties. They worry that any new office complexes near the Capitol could potentially compete with their downtown office properties.

Musty said state officials will evaluate the region's office sector in six months to determine the true demand for office space following the pandemic.

By December 2021, most businesses are expected to have called their workers back into the office. That move could greatly improve downtown St. Paul's alarming office vacancy rates, which were 23% as of December 2020, according to Cushman & Wakefield.

Musty noted that whatever becomes of the Sears site, it will join a flurry of recent construction activity in the area.

Kraus-Anderson Construction recently completed a nearby 100-micro-unit apartment building on University Avenue, while a new dialysis clinic and retail center has opened on Rice Street. Construction recently began on a new K-12 charter school at the corner of University Avenue and Marion Street.