Minnesota Snapshot: Block 518 takes shape in downtown Mankato

Anne Bretts, Special to Finance & Commerce
Finance & Commerce
Date: April 23, 2015

* Edited Article Summary

115 W. Cherry St., Mankato

The Tailwind Group is in the middle of construction on the Ridley Tower, a 50,000-square-foot, five-story Class A office building that’s part of Tailwind’s ambitious $40 million Block 518 redevelopment in downtown Mankato.

The building set for completion in November will be the headquarters for Mankato-based Ridley Inc., a major producer of livestock feed and nutritional products. Ridley has reserved 70 percent of the building.

As Finance & Commerce has reported, Block 518 included two new office buildings, a mixed-use retail and apartment building and a public parking ramp, covering about 70 percent of the block shared with four existing buildings.

The project is expected to cost a total of $40 million by the time the last building opens later this year. That total includes about $10 million in public money for the parking ramp and related infrastructure.

The sleek—and expensive—new offices were a gamble that paid off, Mankato City Manager, Pat Hentges said. The developers tapped into pent up demand for Class A space and have created what he calls “office envy” among some tenants in older buildings.

They had the idea of doing it right,” he said. “They dreamed big.”

Smith believes that he and brother Landon Smith and their partners Reggie Reed and Michael Sather benefited from great timing.

“Keep in mind that there hasn’t been a new office building built in downtown Mankato since 1983,” he said. The average lease rate before the latest construction was $13 to $16 per square foot, but Tailwind tenants have been willing to pay from $17.50 to $21 per square foot,” he said.

Not too bad from a team of four entrepreneurs who started out creating and managing college housing 10 years ago—while Smith was still in his 20’s—and added commercial work in the last five years. They now are doing projects throughout southern Minnesota, but Block 518 is by far their biggest venture.

“It grew organically,” Smith said of the way the Mankato project has expanded. The first finished building in the block, Profinium Place started out as a five-story Class A office building at 100 Warren St. It quickly became a seven-story, 75,000-square-foot building that was 80 percent leased when it came out of the ground, he said.

The two-story parking ramp swelled to four stories to meet demand. It opened in February.

Tenants in Profinium Place, which opened in March, include the Mankato branch bank of Fairmont-based Profinium Inc, CPA firm Abdo, Eick and Meyers and commercial real estate company Lidstrom Commercial Realtors.

ISG, which designed the project has staked out space for new offices in Profinium Place. Builder Met-Con Cos., which has offices in Mankato and Faribault, essentially built its own local office.

The third building also under construction, is an as yet unnamed 40,000-square-foot mixed-use building at 512 S. Front St.  It includes 6,000 square feet of retail and office space on the first two floors and 20 upscale loft apartments on four upper floors.

Mankato – Economic Boom

Paul Vogel, Director of Community Development, City of Mankato
The Connection Minnesota Shopping Center Association
Date: March 5, 2015

Mankato, Minnesota is a major regional center that has been designated as a Metropolitan Statistical Area and has earned several livability awards. Recently, it was reported that Mankato’s economic growth leads Minnesota and is among the top in the nation. Low office and energy costs and a productive workforce make Mankato one of the least expensive places to do business in the Upper Midwest; and, in the top 17 percent of the nation.

2014 was a record year for commercial/industrial development — Wal-Mart, Mills Fleet Farm, the Fed Ex building and some others,” said Mankato City Manager Pat Hentges.” We’ve had the best commercial year since the boom years of the ‘90s with the construction of River Hills Mall.” Jonathan Zierdt believes there is much more to come. “This is one of the biggest years on record and 2015 looks really strong,” said the president and CEO of Greater Mankato Growth. He points to four construction projects already slated to start next year: the downtown civic center expansion, new dining and clinical buildings at MSU, and a new middle school. “Those four projects alone are $150 million.”

The $75 million Wal-Mart distribution center, which has been anticipated for nearly a decade, is nearing completion on the east edge of Mankato. At 454,000 sq ft, it will be 2.7 times as large as Mankato’s Wal-Mart store. About 100 semis a day will move in and out of the site when it opens early next year.

The most high-profile construction projects are taking place on a one-block area of downtown Mankato. Tailwind Group is leading the construction of a seven-story office tower on the corner of Warren Street and Riverfront Drive, a five-story mixeduse building on Front Street and a five-story office tower on the corner of Cherry Street and Riverfront Dr. There were also several new strip malls built this year and others that were refurbished and expanded, often with two or three floors added for rental housing.

To read the full story click here.

UPDATE: Multi-Million-Dollar Downtown Development Takes Shape

KEYC – Mankato News, Weather, Sports
Date: Thursday, February 26, 2015
Updated: Friday, August 21, 2015

Several projects in downtown Mankato are either finishing up or just beginning construction.

Those projects are changing the look in the center of the city.

For nearly thirty years, Mr. Monogram has been located in downtown Mankato.

Owning the business for the past decade Owen Dundas has seen the area around his shop change for the better.

Dundas says, “The fact that we’re doing this renovation and making changes and trying to invite more people downtown. I just think that it’s going to lead to good things.”

Right across the street, the Tailwind Group has just started construction on The Residences of 518. The facility is to used for both retail and living spaces.

Reggie Reed, the director of operations for Tailwind Group says, “For 518 some residential leases are already signed up. It looks like the demand is definitely there. Our lease agents are busy working on that.”

Dundas says, “It’s going to be exciting to see. There’s going to be new tenants in there and hopefully that’s going to lead to more business for us and our neighbors.”

Around the corner, the new tower changing Mankato’s skyline is wrapping up final touches as new tenants will be moving into Profinium Place within the next 30 days.

Reed says, “It was planned for January of 2015 when we said we could provide them with their personal space. Now it’s up to them to finish it off. Each tenant space is based upon their own timeline based upon what their move–in day is.”

Dundas says, “It’s really amazing to see how quickly that’s come together.”

Reed says, “I think this town will be positively unrecognizable in the next couple of years.”

The first tenant in Profinium Place is the accounting firm, Abdo, Eick and Meyers. They’ll be moving in next month.

FLYING HIGH: TAILWIND GROUP MAKES ITS MARK IN MANKATO

Tim Krohn

Minnesota Valley Business Magazine

Date: January 2015

When Kyle Smith was working full-time as a pilot for corporate clients more than a decade ago, he would spend his down time renting a car and driving around communities across the country. He’d notice commercial and housing trends, like what tenants in strip malls were popular and the types of amenities college housing complexes were offering.

That curiosity would help him and some business partners as they later created Tailwind Group and dove into commercial and residential development in Mankato and across the Upper Midwest.

“We looked at student housing in the southwest and southeast and duplicated it here in Mankato,” said Smith, who, at 35, is one of the most active developers in the area and has one of the highest profile projects in local history going on along South Front Street.

That duplication of student housing led to College Town, a gated, 114-bed housing community located near Minnesota State University. The community includes 80 individual buildings with amenities students expect today. “It’s different than it used to be. They want their own bedroom and bathroom and all the amenities,” Smith said.

That eye for trends helped Smith and his partners – including long-time friend and fellow pilot Reggie Reed, brother Landon Smith, and Michael Sather – to begin investing in and developing other student housing and commercial projects including strip malls. But it’s the $40 million project, including a parking ramp and three towers, that is transforming downtown Mankato and pushing Tailwind’s profile from an under-the-radar business to major developer.

To read the full story click here.

ON THE BOARDS: DOWNTOWN MANKATO REDEVELOPMENT

AIA Minnesota

Finance & Commerce

Date: September 2, 2014

Editor’s Note: On the Boards is an occasional roundup of building projects designed by firms belonging to the American Institute of Architects Minnesota. Submissions from AIA Minnesota architecture firms are encouraged. Highlighted projects are notable for the impact their quality designs will have on the communities in which they reside.

Project: Downtown Mankato redevelopment

Location: Mankato, Minnesota

Project description: On the cusp of a sizable boom in local development, this project represents the first significant privately financed office buildings to rise in downtown Mankato in more than four decades and is the largest downtown development in nearly two decades.

The project includes demolition of two buildings and construction of three new buildings. The first building, Profinium Place, is a seven-story, 75,000-square-foot office complex situated on a corner lot that will serve as a gateway to downtown.

The second building, a five-story 40,000-square-foot, mixed-use building along South Front Street, includes a restaurant and art gallery on the first floor, upscale apartments on the second, third and fourth floors, and additional hospitality space on the fifth floor.

The third building is a five-story, 50,000-square-foot office building with Class A office space that will serve as the new headquarters for Mankato-based Ridley Inc.

The redevelopment provides an opportunity to address a high demand for parking from existing area businesses in addition to supporting the new construction. Parking improvements include constructing a parking ramp adjacent to the office tower and behind the mixed-use building, and a public parking lot at the corner of Warren and Front streets with a total of 360 stalls.

Additional details: This new construction project will significantly increase commercial and office space in the downtown area and will serve as a catalyst for additional urban renewal.

Projected completion date: November 2015

Architect: I+S Group (ISG)

Project team: Bryan Paulsen, AIA, LEED AP, CID;Paul Lawton, AIA, LEED AP; Nicole Schroeder, NCIDQ, LEED AP; Dallas Willman, NCIDQ; Jason Hoehn, PE-Structural Engineer; Brent Krohn, PE-Structural Engineer; Tony Effenberger, PE, LEED AP-Mechanical Engineer; Mike Nelson, PE- Electrical Engineer; Chuck Brandel, PE- Civil Engineer; Greg Borchert, CDT, LEED AP- Project Manager; Justin Steffl-Project Manager.

Owner/developer of office buildings: Tailwind Group

Owner of parking ramp: City of Mankato

Builder: Met-Con Cos. & Knutson Construction

Partners: Alvine Engineering, Bark.L Consulting Engineers

THE VIEW FROM PROFINIUM PLACE

Ryan Gustafson, News Reporter

KEYC – Mankato News, Weather, Sports

Date: July 30, 2014

Profinium Place, the keystone of The Tailwind Group’s development along Riverfront Drive, continues to take shape.

From the top of Profinium Place, downtown Mankato is put into a new perspective – the civic center, apartment complexes, storefronts and houses – blocks stacked, layer upon layer, climbing up the valley.

Michael Sather, chief financial officer for The Tailwind Group, says, “Great views of the valley, great views of the river. Views of all of Mankato and it’s amazing.”

From this perch, you get a scope of everything going on around the main building as well, including the work on the Warren and Front Street intersection, as well the parking ramp, which was the only portion of the project to be hampered by the weather.

Sather says, “The excess rain in June had some impact on the ramp, but they’re back on track and our building, you can see we’re well out of the ground and now we just need to put the pieces together on the inside.”

That practice is visible on the service elevator, with work taking place on every floor.

With the goal being to get tenants in the door as soon as possible.

Sather says, “As we finish the structural component of the building, we’ll also build the tenant spaces at the same time. The electrical, HVAC, carpeting, their final finishes. What you’re seeing is a big effort with all of the parties.”

Watch the video here.

ROCHESTER AREA CHAMBER OF COMMERCE MEMBER SPOTLIGHT

Rochester Area Chamber of Commerce Advantage

Date: June 2014

Landon Smith, a partner in the Tailwind Group development
company, recently expanded the business into Rochester. This
trend in business growth in our community promises to explode
thanks to the Destination Medical Center and Journey to Growth
initiatives. Future businesses looking to do the same would do
well to heed Smith’s advice: If you want to successfully break
into a new community, join the Chamber of Commerce.
The Tailwind Group originates from Mankato, where they
specialize in renovating and converting properties to rental units
for Mankato State University student housing, as well as other
renovations and developments around Mankato. A licensed
real estate broker, they manage 1,500 residential bedrooms and
150,000 square feet of commercial office space.
When they learned of the opportunity to purchase the property
known as Evanston Heights located adjacent to the RCTC
campus, they were excited to move into a new community, but
also cautiously apprehensive. “It’s our first expansion into this
market,” says Smith. “We’ve never done a two-year school
before, never worked on a student housing project outside of
Mankato.” Rochester was an unknown. Before committing to
the sale, Smith reached out to the Rochester Area Chamber of
Commerce to learn more about the community and to begin
making contacts. “They got the ball rolling for us,” says Smith.
“We became members even before we purchased the property.”
The investment paid off immediately.
“The Chamber helped me connect with (former RCTC President)
Don Supalla to get a feel for the place. They opened the doors at
RCTC for us to meet the interim President, Gail O’Kane. They
made us feel comfortable going through with the purchase.”
Construction began mid-January and will conclude mid-July.
When finished they will have completely remodeled the entire
complex: 60 4-bedroom, 2 bath apartments spread across five
buildings. Re-Branded “The Quarters”, leasing is going well.
“What we’ve gotten in return for our membership fee is probably
six-fold the value,” says Smith. “As a Chamber member,
relationships that would have taken me a month to figure out
and establish on my own, were made in two days. Joining the
Chamber has been key, for a reasonable fee they can tell you
who to contact, and help you build the relationships you need to
succeed.”
View the full article here.

SOUTH FRONT PROJECT GROWS

Tim Krohn

The Free Press, Mankato, MN

Date: Friday, March 21, 2014

MANKATO — The biggest private downtown Mankato development ever just got bigger.

Tailwind Group of Mankato has already begun construction on a seven-story office tower on the corner of Warren Street and Riverfront Drive and a four-story multi-use building on South Front Street. Now, Tailwind has announced it will also begin construction this summer on a third building on the block — a five-story corporate office that will initially house 80 to 100 employees.

“It’s a hundred more employees downtown,” said Kyle Smith, owner of Tailwind. “To have it happen ahead of schedule is exciting.

“It’s a combination of people looking for a different level of office space. But it’s also that people have accepted that downtown is for real,” Smith said.

The name of the corporate tenant will be made available in the next couple of weeks, but it is an existing company in Mankato. Smith said the new tenant will occupy about 75 percent of the new building.

City manager Pat Hentges said the fact tenants are willing to pay for higher-end office space — Smith said rates are 20 to 30 percent above traditional market lease rates here — shows the city has reached a new level of success in transforming the downtown.

“The leases they are talking about are substantially more than what they’re paying now, so their interest to be in a high-end development confirms the vision Tailwind and others had for this area. It’s really coming to fruition as a corporate and entertainment district,” Hentges said.

With the cost of the new building, the total construction in the block will top $20 million.

The seven-story building is $9.2 million, while the four-story building is $4.2 million. With the parking ramp, the project was at about $16 million, prior to the announcement of the third building being a go.

The new development means the city will need to add one more level to the parking ramp it is building amid the new buildings. What was to be a three levels will now be four, if approved by the City Council. The council, acting as the Economic Development Authority, is being asked at its Monday meeting to allow the city to move ahead with a feasibility study for a bigger ramp, which will also be built this summer.

The additional parking space will support employees in the area as well as nighttime visitors to the downtown entertainment district.

Hentges said the massive, multi-building construction in one block will be hectic, but getting it all done in a season is something everyone is looking forward to.

“The businesses (downtown) are putting up with the construction but they see it as a positive. What the businesses are excited about is this is packing in 200 or 300 employees who will have lunch or whatever.”

Hentges said that his stress is to make sure the city infrastructure, including the ramp, is delivered on time as promised.

“Tailwind is doing what it should and the businesses are putting up with (construction), our burden is to deliver what we need to in time.”

Smith said he, too, is happy all of the construction can be done at once.

“The neighbors give us support, but I know they’re struggling through this. So I want to get it done as soon as possible.”

This past winter, crews demolished the Miller Motors and Red Sky Lounge buildings along Front Street to make way for the four-story building.

The development has brought Tailwind Group to the public forefront.

In the past few years Tailwind has been involved in an array of commercial and multi-housing renovation and construction projects in the area, including the construction or renovation of several strip malls.

Tailwind Group describes itself as a fully-integrated, property development, management and leasing firm. They often work with property owners and participate in joint ownership of projects. They are also heavily involved in developing and managing student housing around universities.

The work by Tailwind in the area will dovetail with a city project that aims to upgrade three blocks of South Front Street in an effort to create a dining and entertainment destination downtown.

The City Council recently approved spending $1.3 million this summer to transform South Front Street from Cherry Street to the Public Safety Center from its current stark, utilitarian nature into a pedestrian-friendly street of sidewalk cafes, trees and benches.

Vehicles would still be allowed but drivers will get just a pair of relatively narrow lanes to make room for the wide sidewalks and related amenities.

Read more here.

TOP GUNS

Daniel Vance

Connect Business Magazine

Date: March 2014

Mankato-based, high-flying Tailwind Group has become a fully integrated property development, leasing, and management firm.

Loquacious and mentally quick Kyle Smith is only 34 and at such a young age already co-owns the in-progress seven-story Profinium Place in Downtown Mankato, a 60-unit student housing apartment complex in Rochester, retail projects in Owatonna, two General Nutrition Centers, 65-house RentMSU, 114-bed College Town, The Lofts@1633, the College Station apartments, four retail centers in Mankato and North Mankato, two Waseca group homes, and other projects. Along with his sister, he used to co-own 20 Anytime Fitness franchises and eight additional General Nutrition Centers.

He built all this while employed as a corporate airplane pilot. In 2001, at age 22, after 9-11 caused a downturn in aviation, Smith initiated a chain of events leading to his involvement in all the above by buying, fixing up, and selling a Mankato rental property using only $2,500 down and his credit card. That started everything.

End of story.

Not quite.

This feature story can’t—and won’t—be just about Smith. He readily admits he would have accomplished but a fraction of the above without his parents, Uncle Mark Smith, sister Karmen, and fellow Tailwind Group partners Reggie Reed, Michael Sather, and brother Landon Smith.

In our Connect Business Magazine interview, from a stylish conference room at College Town in Mankato, Smith repeatedly said “we” rather than “I” when answering questions about business accomplishments.

Think of Kyle Smith as southern Minnesota’s business version of the Top Gun character played by Tom Cruise, Lt. Pete “Maverick” Mitchell—a shoot-from-the-hip, spontaneous, go-by-his-gut, risk-taking, high-flying pilot. Smith plays that leading role as well as any business decision maker in our reading area. He flies fast. But without his squadron partners—“Goose” Reed, “Jester” Sather, and “Viper” Smith—covering his wing and mopping up after his sorties, Smith today by himself would own merely a flyspeck of Tailwind Group’s current real estate assets. Unlike the cocky movie character “Maverick,” Smith realizes every day his need for and dependence upon others.

To read the full story, click here.

DESIGN ALTERED ON DOWNTOWN OFFICE TOWER

Mark Fischenich

The Free Press, Mankato, MN

Date: Monday, January 20, 2014

The final design of the seven-story office tower that will rise this winter from the hole at the intersection of Warren Street and Riverfront Drive has been submitted for city approval, and the demolition of the old Miller Motors building on Front Street will occur this week — making room for the accompanying parking ramp and four-story mixed-use building.

The design of the office tower, being developed by the Tailwind Group, is headed back to the Planning Commission because of some changes from the original proposal. Essentially, there will be less brick and more architectural metal on the side facing Cherry Street and the side adjacent to Riverfront Drive. The primary face of the building at the corner of Warren and Riverfront, and the Warren Street side, are unchanged.

“The building’s essentially the same,” said Mankato Community Development Director Paul Vogel, who guessed that the changes were made by the architect for aesthetic reasons. “It doesn’t affect the value of the property or the project.”

Downtown residents and workers wondering how much longer they’ll be listening to the rhythmic banging of the pile drivers can take heart. Vogel said that work should be done by the end of next week, at which point the steel beams will begin to be erected on the $7.85 million Profinium Tower (named after its primary tenant).

Demolition of the Miller Motors and Red Sky Lounge buildings this week will make way for the $4.2 million building on Front Street, which developers say will include a new Red Sky Lounge, an unnamed restaurant and apartments.

The project, the largest private investment in downtown Mankato in four decades, started a few weeks later than originally anticipated but is still projected to be completed on schedule, Vogel said. The parking ramp, which brings the total value of the project to more than $16 million, is slated to be finished in September, the office tower in November and the mixed-use building next January.

Read the full story here.

CONSTRUCTION BOOMED IN MANKATO IN 2013

Tim Krohn

The Free Press, Mankato, MN

Date: December 29, 2013

MANKATO — As the state and nation continued its relatively slow ascent out of the recession, the Mankato area saw a dizzying amount of new construction and business growth in 2013.

Topping the list is the recently started $15 million Tailwind Group project along Front Street and Riverfront Drive in Mankato. The project will see the demolition of Miller Motors and RedSky to help make way for a housing and retail building on Front Street, a parking ramp and a seven-story office tower along Riverfront Drive.

Construction in Mankato was up by a third in the first nine months of the year compared to the same period last year.

The $8.9 million Mankato Clinic expansion on the Wickersham Campus is underway, with an opening slated for mid-2014.

VINE Faith in Action’s $5.5 million project near downtown is transforming a former college classroom building turned government office building into in an adult community center for area residents in “mid-life and beyond.” The complete gutting of the Nichols Office Center began this year, with completion expected in the middle of next year.

Imperial Plastics built a new $10 million building in the city’s east-side industrial park.

A flurry of retail and restaurant construction also took place this year, much of it in-filling vacant lots along Madison Avenue.

Pawn America recently opened a new store with more warehouse and retail space than its former site on Madison Avenue.

A new Panda Express restaurant also opened recently in front of Cub Foods on Madison Avenue.

Family Video and Marco’s Pizza built a building along Victory Drive, behind McDonalds. The video store is open with the pizza shop to open soon.

Meanwhile, construction is moving fast on a strip mall and a standalone building in front of Crossroads Center, across Madison Avenue from the entrance of Walmart. The standalone building will be a Starbucks, which a few years ago closed a store near where the new one will be.

A strip mall near MSU, across from CVS, saw a total renovation this year, with apartments added on top and retail space on the ground floor that includes Massad’s and Yu’s Chinese Cuisine.

The city also saw the construction or renovation of other strip malls and construction of several apartment complexes.

As big as the year has been, 2014 promises to be even bigger.

A large area of land behind Madison East Center was cleared this summer, preparing for development of upper-end apartments as well as office and commercial buildings. As part of the project, the city completed an long-hoped-for extension of Adams Street behind Madison East Center.

But the biggest project to get underway next spring will be the Wal-Mart distribution center, scheduled to open in 2015.

It will be the biggest private building project in Mankato since the River Hills Mall.

City officials are estimating the project will cost between $25 million and $35 million.

The 420,000-square-foot facility, which will store and distribute perishable food products to Wal-Mart stores throughout the Upper Midwest, is only the first of two phases Wal-Mart has planned for the land it purchased in 2005. Company officials plan to add a 400,000-square-foot dry goods distribution center in the future.

Read the entire article here.

MANKATO FIRM TO UPGRADE ROCHESTER STUDENT COMPLEX

Jeff Kiger

The Post-Bulletin, Rochester MN

Date: Wednesday, November 27, 2013

A Mankato-based development company is planning to upgrade a Rochester student housing complex it recently purchased for $2.2 million.

The Tailwind Group, a property development and management firm, bought Evanston Heights at 830 21st Ave. S.E. on Nov. 14. Tailwind owns and manages a number of student housing and commercial properties in Mankato.

“Our plan is to re-face it, remodel it, re-name it and re-brand it,” says Landon Smith, one of Tailwind’s four owners. “It has been deteriorating for a while. Our goal is to get it more up-to-date and more attractive. Amenities are important to today’s students.”

The 27-year-old Evanston Heights has five buildings on 6.6 acres with a total of 60 housing units. It’s located near the Rochester Community Technical College’s campus and traditionally has been home to RCTC students.

It has struggled in recent years compared to its heyday. It sold for $2.8 million in 2000. The next time it changed hands in 2006, it sold for $4.27 million.

Smith estimates that Tailwind will invest around $2 million to renovate the faded facilities. This will be Tailwind’s first project in Rochester.

“Our main focus has always been student housing, so it’s a safe play for us. It’s close enough to Mankato, so we can still manage it,” he says.

While the firm has many projects in the works in Mankato, the Evanston Heights deal is sort of an experiment to test the waters here.

“Rochester’s an exciting community, so we thought we’d try it out,” says Smith.

Read the entire article here.