City struggling to preserve industrial property against condo demand

The Minneapolis condo boom has helped fuel a real estate renaissance in parts of the city that have been long neglected, but the price has been paid in a dramatic loss of industrial property—up to 30 percent by some estimates. And while the gradual whittling away of factory space may not concern upper-income condo buyers, it’s become a ticking time bomb for city officials, who worry that the city’s industrial base—and the good-paying jobs it provides—may be disappearing.

City planners have been studying the issue for the better part of two years, and Thursday they presented their findings to a special joint meeting of the Community Development and Zoning and Planning committees. Their conclusions were hardly surprising: Minneapolis, like many major cities, is suffering from an alarming loss of industrial property and will continue to do so unless the City Council prohibits developers from turning factories and warehouses into housing.

“There is substantial untapped demand for industrial space,” said Mark Spector, a consultant with Maxfield Research, who helped author the study. And that demand indicates a recovery in the region’s industrial economy—though that economy is shifting from heavy to light industrial operations.

But critics argue that a total ban on housing development in places like Shoreham Yards in Northeast Minneapolis, and the Humboldt, North Washington Avenue, and Upper River industrial areas of North Minneapolis would stifle the gains already underway in those areas, where condos and other commercial development have revived the street life and local economies.

“How absolute should we be on this?” asked Mayor R.T. Rybak. “I’m arguing for blurring the lines.”

Areas like Shoreham Yards, an old railroad yard with serious pollution remediation needs, will never be redeveloped unless there’s a housing and commercial component, Rybak said. “If we say we only want industrial, it’s not going to happen.”

There are risks associated with mixed development in an area that is largely zoned industrial, said city planner Jennifer Jordan. Truck traffic is a constant issue for nearby residents, for instance. And high-end condo developments can raise property values to the extent that potential industrial developers can be priced out of the market. “There’s an inherent conflict between residential and industrial property,” Jordan said.

And by ignoring that conflict, the city could face a continued decline in the number of living-wage jobs for industrial workers, a decline that some argue has created pockets of chronic poverty and violent crime over the past 30 years.

Still, the city’s tendency toward mixed-use development—especially in transit corridors—has clearly seen some success in recent years. Why would the council want to box itself in with an absolute prohibition, asked Ward 10 Council Member Ralph Remington, who represents the Uptown area.

Those restrictions negate the political pressures brought to bear on the council by neighborhood organizations who favor certain developments, regardless of city policy, explained Ward 7 Council Member Lisa Goodman. “It’s the convergence of politics and policy,” she said. “The neighbors don’t like it, and we make an exception. With absolutes, we won’t have politics playing a part in it.”

Goodman’s theory was clearly evident in the public hearing that followed, as representatives of neighborhood groups, private industry, and the Park Board all weighed in with their reasons why—in their particular area—a policy restricting the type of development was a bad idea.

Sensing no consensus emerging, the committee agreed to continue researching the matter and bring it back for debate at its September 14 meeting.