Developers Hyde Development and M.A. Mortenson Have Purchase Agreement for Adjacent Property
A multinational quality assurance company is moving into Northern Stacks, a 122-acre distribution and office park located in Fridley, Minnesota, spearheaded by Hyde Development and M. A. Mortenson Co., both of Minneapolis.
London-based Intertek leased a 70,509-square-foot space at Northern Stacks VI, located at 40 51st Way. With the deal, the business park is now 93 percent leased, well ahead of the developers' expected time frame.
The leasing success is spurring a new development phase as the developers have a contract to buy a nearby industrial building with the intention of turning it into Phase VIII of the Northern Stacks project.
Intertek currently has three locations in the Twin Cities, according to its website: an office for its construction unit at 2915 Waters Rd. in Eagan, space for its building products division at 849 Western Ave. N. in St. Paul, and a commercial and electrical operation at 7250 Hudson Blvd. in Oakdale.
The St. Paul and Oakdale locations will be consolidated into its new home at Stacks VI. Intertek is making the move to be closer to its customer base, and also needed more space for its testing labs, Colliers International broker Pete DuFour said in a prepared statement. DuFour represented Intertek during the transaction.
Executives at Intertek and Mortenson could not be immediately reached for comment, but the developers finished work on the building shell where Intertek is locating in May, said Paul Hyde, founder of Hyde Development. Intertek is expected to move in by Jan. 1, 2019.
With Intertek on board, all but two spaces have been filled among the six existing buildings at Northern Stacks, a former Superfund site that was home to a gun turret factory during World War II. The two remaining available spaces are in Stacks V (62,591 square feet) and Stacks VI (50,091 square feet). Another building, 200,000-square-foot Stacks VII, is under construction and has been leased in its entirety to LKQ Corp., a Chicago-based auto parts supplier.
Development and lease up of Northern Stacks is well ahead of schedule. Hyde and Mortenson estimated that it would take eight years to complete the development when they broke ground in May 2014.
"Two things have really helped us: Because of the migration from retail to e-commerce, in-fill warehouse properties are in demand and we benefited from a sustained economic growth cycle," Hyde said on Wednesday. "We were also able to deliver the buildings very quickly, which allowed us to make the most of it."
Given Northern Stacks’ track record, the partners are now moving to acquire another site, which will become Stacks VIII. Hyde said the two have a deal in place for an 180,000-square-foot building at 5101 Industrial Blvd., currently owned by Alltemp Distribution Co. The property sits across the road from Northern Stacks on the development’s southeast side.
The transaction is expected to close on July 27. Hyde declined to disclose the purchase price.
The property went on the market about a year ago, said Chris Weirens, a broker with the Minneapolis office of Cushman & Wakefield who is representing Alltemp. It debuted with a purchase price of about $10 million, he said, though he deferred comment on the final price to Hyde.
Alltemp sold its business to Murphy Warehouse Co. about five years ago, but retained ownership of its real estate, Weirens said. Murphy has been leasing the building since then, but its contract expires at the end of the year.
"Interest was very strong in a building of this size," Weirens said, adding that it was uniquely well-positioned in a market that is hungry for warehouse space close to the urban core. "It has loading docks and doors on three sides and an active rail spur too, so all four sides can be used for unloading goods."
Hyde and Mortenson plan to renovate the building. No tenant is yet on deck for Stacks VIII, Hyde said, but the partners have gotten several expressions of interest from large users.
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