Former 3M Site to be Sold for $1, Redeveloped
A real-estate investment fund has agreed to pay $1 to acquire four buildings on part of the former 3M Company campus in St. Paul.
Ironton Asset Fund, LLC, has signed a purchase agreement with current owner, the St. Paul Port Authority-and the Port Authority's board of commissioners approved the sale at its October 26 meeting.
St. Paul-based Ironton, led by retired attorney and real estate investor Jim Stolpestad, has one year to prepare a redevelopment plan, secure tenants, arrange financing, and close on the purchase of the 4.32-acre site on which the buildings sit, according to a St. Paul Port Authority memorandum. The memorandum states that by selling the property for just $1, the Port Authority is providing a business subsidy valued at $1 million.
The purchase agreement includes Building 21, an office building that used to be the headquarters of Maplewood-based 3M, and three other industrial buildings. The buildings and the land being acquired are located in Beacon Bluff-a 61-acre site in the historic Dayton's Bluff neighborhood on St. Paul's east side. Building 21 is approximately 50,000 square feet, and the other three together total about 450,000 square feet, Stolpestad told Twin Cities Business on Friday.
The purchase agreement stipulates that Ironton must bring jobs to the site-three for every 1,000 square feet of rentable space in Building 21, and one-and-a-half for every 1,000 square feet of rentable space in each of the other three buildings.
If all 500,000 square feet was comprised of rentable space, Ironton would be required to add 825 jobs. However, Stolpestad said the rentable portion will be significantly less than the gross square footage, adding that he hasn't yet done the math to determine the number of jobs likely to be created.
The purchase agreement also requires Ironton to lease the buildings only to tenants that pay employees at least $11 per hour-and that try to ensure that at least 70 percent of employees hired are St. Paul residents.
Stolpestad said that he's unsure exactly what his fund will do with the buildings but said it's likely they'll develop them for office use-possibly with some medical office space-and industrial activity.
“The big challenge will be trying to find a reuse for the industrial buildings,” Stolpestad said Friday morning. “We'll have to see how the market plays out.”
He said he's confident that the fund will be able to find tenants but conceded that “it won't be as easy as renting out a building in downtown Minneapolis, for example.” If Building 21 was in a city like Edina, he believes that it would be fully leased. “But this is kind of a depressed part of town,” he says.
Ironton Asset Fund was created 2009 as an affiliate of St. Paul-based Exeter Realty Company and was set up to buy distressed real estate. It recently closed on its first acquisition-a seven-story office and studio building at 2402 University Avenue. The fund intends to convert the building into market-rate apartments, Stolpestad said.