MNCAR Focus/MNCAR Featured in Finance and Commerce

MNCAR Featured in Finance and Commerce

Cashing in on Rochester’s boom

by Chris Newmarker

Published: June 6th, 2013

The Mayo Clinic is putting together a nonprofit economic development authority that will work on project deals to bring to the public Destination Medical Center Corp., authorized by legislation signed last month by Gov. Mark Dayton. (AP file photo: Rochester Post-Bulletin)

MNCAR members learn what’s next for Mayo Clinic plan

ROCHESTER, Minn. — Now that the state government has approved it, there may be a bit of gold rush fever building around the $6 billionDestination Medical Center project at the renowned Mayo Clinic and its home city of Rochester.

But those on the ground gave a reality check Thursday at a meeting in Rochester sponsored by the Minnesota Commercial Association of Realtors.

“I have to assure people that the streets are not paved in gold,” said Scott Hoss, a leasing manager with Paramark Real Estate Services who has volunteered to promote the Mayo project.

Hoss and Destination Medical Center manager Heidi Mestad talked to a few dozen members of the group about what comes next.

Under legislation signed last month by Gov. Mark Dayton, the city of Rochester and the governor have 60 days to appoint members of a public Destination Medical Center Corp., which will come up with a development plan.

Meanwhile, Mayo Clinic is putting together a nonprofit economic development authority that will hammer out project deals to bring to the corporation.

Hoss said there is no requirement for the corporation to bid out the authority work, but it will have to be publicly approved.

“Mayo Clinic will be forming the EDA [economic development authority], but it needs community support,” Hoss said.

Under the legislation, the state and city pledged to spend $600 million on Rochester infrastructure over the next 20 years.

The idea is to build the roads, sewers and other infrastructure needed to support the high-end hotels, restaurants and other development that would enable the Mayo Clinic to attract more patients and their relatives.

In successfully seeking legislative support for the plan, Mayo Clinic officials projected that the public money — along with $3.5 billion in capital projects that the health provider is planning in Rochester during the next 20 years — would leverage another $2.1 billion in private investment.

That could amount to $6 billion in capital spending around the Destination Medical Center project.

Bucky Beeman, a commercial real estate agent with Rochester-based Realty Growth, said after the meeting that he has not seen much of an uptick in activity yet. Still, he says, “there is a buzz.”

“There is a lot more talk of what is going to happen,” said Mike Benike, a project manager at Rochester-based Alvin E. Benike Inc., a decades-old contractor that is heavily involved in health care construction.

Benike said the future is more certain in the city now that the legislation has passed. There likely will be added competition from construction companies based elsewhere. But, “if you do good work, things will take care of themselves,” Benike said.

A development plan is months away. Both Hoss and Mestad said it would be based on the Rochester Downtown Master Plan, with most of the public infrastructure dollars going toward the downtown core and a another “health and wellness” area around Mayo’s St. Marys Hospital to the west.

“Health and wellness” is one of “seven pillars” that the infrastructure will support. The others are: a mixed-use, walkable “livable city” area around the Zumbro River; hotel and hospitality; retail, dining, entertainment, arts and culture; commercial research and technology; a new University of Minnesota Rochester campus on the southern edge of downtown, and sports and recreation opportunities.

Developers are getting the message.

A 300,000-square-foot, mixed-use development proposed at the southeast corner of South Broadway and East Center Street offers a little something for everybody: a four-star hotel, market-rate apartments, office space, a grocery store, restaurants and other retail.

The project already fits in with the downtown master plan, which envisions a “Main Street” mixed-use district in the area.

Hoss and Mestad allowed that some money would go to transit, bike-sharing initiatives and similar transportation projects to help with the downtown commute for the 35,000 to 45,000 workers that the city is expected to gain over the next 20 years.

“If the growth needs to happen in other places, it’s there,” Mestad said of the public money.