Hyde ready to build in Fridley

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Minneapolis developer Paul Hyde is close to taking the first steps in his $100 million to $150 million redevelopment of a massive industrial site in Fridley.

Hyde Development will break ground this spring on the first of several buildings planned for the 122-acre River Road Industrial Center in Fridley, which will be re-branded as Northern Stacks. Last July, the developer closed on the $13.75 million purchase of the property at 4800 E. River Road. Anoka County values the entire site at $9.95 million.

Hyde won’t begin demolition of the sprawling 2.05-million-square-foot industrial building on site — considered the largest industrial building in the state — until early 2016, when current leases to BAE Systems and other tenants in the building have expired. But the company obtained city approval months ago to build on about 32 acres south of the building, according to Fridley planning manager Julie Jones. The site is now used for parking.

“When you have that chance to redevelop that size of a site that’s an infill location, that’s going to have its own gravity regardless of where it is,” Hyde said of the site, which is about a half-mile south of Interstate 694 and just east across the Mississippi River from I-94.

Hyde will soon break ground on a 213,000-square-foot bulk warehouse, to be built on speculation. The project, which will have 32-foot-clear ceilings, is expected to cost $13 million.

“There are other folks that have done 32-foot-clear buildings and they’ve had some success with it,” Hyde said of his decision to build on spec.

Hyde is also looking for tenants for an $11 million, 135,000-square-foot office warehouse building immediately adjacent to the first building. That property will be under construction as soon as Hyde lands a tenant.

“We’re chasing a few different people for that already,” Hyde said.

Early project feedback from market watchers is positive, largely because of Fridley’s central location and the Northern Stacks’ access to different highways.

“I think the market would receive the product very well,” Ted Carlson, of Eagan-based Carlson Commercial, said Tuesday. “Our clients like new product, and they’re willing to pay for new product.”

The new buildings — and other projects planned for Northern Stacks’ future — could help Fridley compete with cities such as Brooklyn Park, Rogers and Shakopee, where several new industrial projects have popped up. Carlson noted that Fridley, which is more than five miles north of Minneapolis, is closer to downtown than many popular suburbs.

“I think it’s absolutely competitive,” he said. “I like that location; I think it’s a strong location.”

Several potential tenants have aggressive timelines, looking for a new home as soon as the fourth quarter of this year, according to Hyde.

“You can’t do that unless you start in the spring,” he said. “There’s a strong investor appetite for this sort of building, and we’re seeing a lot of good prospects out there.”

Hyde said he hopes to populate the Northern Stacks campus with more “job-intensive” tenants.

“We’re going to get the people that want a great value, a great location and want access to not only customers, but employees,” he said.

Hyde’s projects will use a combination of several sources of public funding. He has $1.4 million in site cleanup grants from the Minnesota Department of Employment and Economic Development and the Metropolitan Council, a $500,000 redevelopment grant from DEED and a $1 million pollution cleanup grant from the city.

The long-term Northern Stacks project also has a tax increment financing agreement with the city. Hyde said about $4 million is slated to go to infrastructure upgrades for the first two buildings.

While work on the new projects heats up, the company will start an environmental investigation of the expansive BAE building. The 73-year-old structure has been used for everything from manufacturing gun turrets for battleships to engineering, but is running out of life.

“That will help us understand what environmental issues there are with tearing that thing down,” Hyde said. “It takes a while to plan for this stuff, so you have to do the work now.”