Kiger's Notebook

A whole lotta gelato going on in downtown Rochester

There's a whole lotta gelato going on at Rochester's Chocolaterie Stam these days.

The downtown specialty chocolate and gelato shop on the second floor of the Shops at University Square scooped up some space on the main level of the mall to create a new gelato-making kitchen.

"Up until now we could only make gelato early before we opened," says owner Ron Schapp. "Basically, we worked in the closet at the store. Now we're out of the closet."

The new space, he says, is about six or seven times the size of the cubbyhole that was previously used for the process.

Chocolaterie Stam began using the new space about two weeks ago to make more gelato, but employees still do it one gallon at a time. The new space is only for production, and sales will remain on the second floor at the main shop.

Having more capacity and storage room is really helpful during the warm summer months, says Schapp.

"It depends on the weather, but we often make 50 to 60 gallons a week during the summer," he says.

And then there is the extra action during the weekly Thursdays on First & Third street fair.

"During Thursdays on First, it is just like having a store opening. On a given Thursday, we might sell 35 to 40 gallons of gelato on just that day," Schapp says.

Stam has 10 chocolate and gelato shops in the Midwest, and Rochester's is typically the top one in sales at least 11 months out of the year, according to Schapp.

The family business, which opened in downtown Rochester in 2008, has nine employees.

More hotel action on Roch.'s 2nd Street

Rochester's growing population and Mayo Clinic's continued success are attracting the attention of hotel developers.

The latest project to be announced is a new Homewood Suites by Hilton extended-stay hotel to be built on the 1300 block of Second Street Southwest.

Rochester developer Marc Carpenter and Torgerson Properties, of Willmar, plan to build the 111-room, seven-story hotel on the open lots next to their Courtyard by Marriott. Including the SpringHill Suites, this will be the company's third hotel within a few blocks of Saint Marys Hospital.

Construction is slated to start in the spring, with an estimated opening date in early 2014. The hotel will feature an indoor swimming pool, a 24-hour convenience store, a fitness center and complimentary grocery shopping services.

The project is described as completing Carpenter's vision for Second Street. Two old houses between the Courtyard hotel and McDonald's were torn down in 2010 as a preamble.

Hotel development is heating up in Rochester.

An 85-room Holiday Inn Express & Suites opened last month a few blocks south of where the Homewood Suites will be built. Across the street, the former Blondell Hotel was gutted and underwent an extensive remodel to be re-branded at the Brentwood on 2nd at the start of the summer.

Just north of the Courtyard by Marriott, a cluster of properties including the Bell Tower Inn sold for $2.72 million earlier this month. The new owners have not announced any plans yet, but many are speculating that the area will be re-developed with a new hotel.

Hoteliers are positioning themselves for the Med City's future, which observers say appears bright.

"It is a bit of a prospecting thing," says Brad Jones, president of the Rochester Convention and Visitors Bureau. "Rochester is very well-suited for growth. I think you will see a fair amount of growth in next five years."

However, the hospitality market is flat at the moment, he says. Rochester hotels were running about 68 percent filled last month. Jones says about 70 percent occupancy usually triggers hotel development.

There has been dramatic increases in room rates here, with the average daily rate hitting $96 and the year-round average clocking in at $95.

That's well above Minneapolis' daily average of $75 and Duluth's $80.

"People are drawn to that. Of course, we have some high-end rooms that skew that number," says Jones.

The city has 5,362 rooms now, and that will grow to more than 5,400 by next year. That puts Rochester second in the state to only Minneapolis, which has more than 10,000 rooms. Many of those hotel guests are people seeking treatment at the Mayo Clinic, and their families.

"It is a huge amount for a community our size," he says.

In the four-state region, Rochester is in the top five cities as far as number of hotel rooms. Rochester has about the same number as Madison, Wis., which has more than double the population.

Speculation over IBM's future in Fishkill

Here's some from an interesting story from the Poughkeepsie Journal, which keeps a close eye on action at Big Blue.

Like in Rochester, the communities in New York have a lot of trepidation about IBM's moves concerning jobs and facilities.

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WICCOPEE — Could IBM East Fishkill one day not be IBM?

A British analyst’s strong speculation that IBM Corp.’s microelectronics business would be sold someday to GlobalFoundries, one of IBM’s chip partners, has put on the table what many in the industry have wondered or whispered.

IBM doesn’t comment on such speculation.

Ronald Hicks, Dutchess County’s deputy commissioner for economic development, said of analysts: “They are speculators, and the best of them are right, and very few are.”

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Were it to happen, it would cast a big question mark over the future of the plant in the Town of East Fishkill near Hopewell Junction, which for decades has been IBM’s major microelectronics center.

That site remains one of the largest employers in the mid-Hudson Valley and has a large portion of IBM’s approximately 7,900 employees in Dutchess, plus people who work for other companies.

Loss of the plant could take hundreds of millions of dollars of income out of the local economy, cost potentially thousands of jobs and leave several million square feet of ex-IBM space empty. Marketing such old space has proved difficult, as in the case of the former site near Kingston, now called TechCity, which remains only partially occupied after IBM shut it in the mid-1990s.

Future Horizons Ltd., a respected industry analyst firm in England, recently did a report for the European Commission to help advance the evolution of the industry in Europe and catch up with the American competition. News reports say its authors offered comments that they assumed GlobalFoundries will purchase IBM’s semiconductor division.

 

Remembering Hanson - Chamber Golf

Today is the annual Rochester Area Chamber of Commerce golf bash at Willow Creek Golf Course.

It is quite a bash, if you haven't been before. And it is an event that I always associate with Denny Hanson, who we recently lost.

For many years, I worked with Denny as a source and as a friend. We had a friendly running competition over who had the freshest bit of business news.

I miss those exchanges. Beyond politics, which I truly have no opinion about, I know he was someone I always enjoyed interviewing.

Many years ago, I even tracked him around the golf course during the tournament for a quote on a business issue that was very sensitive at the time. Eventually, I got a very honest and blunt quote from him. He caught a lot of heat over that quote, but it never stopped him from talking openly to me.

Denny was always a super nova of energy right in the middle of the action at the golf tournament, laughing and joking with everyone orbiting around him. And yes, for those who remember last year's infamous costume, he sometimes crossed the line of good taste.

Like us all, he had lapses in judgement, but he was a very good man who cared deeply for his family and for community. Denny worked tirelessly doing what he thought was best for this community.

Hanson had a fierce appetite for life, which he embraced with a Captain and diet in hand and jolly laugh.

In memory of Denny and his love for the chamber golf tournament, here's a video of him butchering the song, "I Can See Clearly" back in 2009.

Thanks for the memories, Denny.

 

Sale of Second Street properties raises questionsabout future development

Here's my piece from today's paper about the sale of the Bell Tower Inn, the Alpine Inn plus four other properties on Second Street Southwest.

While the details about the new owners and their intentions are sparce, I'd say one strong possibilty is that a local developer with a handful of local investors put together a deal.

We know Rochester Attorney Dan Berndt is representing the owners, since he filed the incorporation of Second Street Parking LLC.

I've heard from unofficial sources that a hotel is most likely the project in the works, but the company name suggests the possibility of some sort of parking gambit, maybe building extra and selling those spaces.

Of course, that speculation could be way off. We'll just have to see what happens.

A cluster of southwest Rochester properties, including the Bell Tower Inn and the Alpine Inn, sold for $2.72 million earlier this month.

That spurs the question of what the new owner — Second Street Parking LLC — has planned for one of the city's highest profile blocks, across the street from Saint Marys Hospital.

It's unclear who's behind the Rochester company or what the plan is for the older buildings that have long been identified as a prime spot for new development.

The recently formed Second Street Parking bought the parcels that cover half of the block of Second Street between 12th and 13th avenues on July 9. The deeds were officially transferred on July 17.

This is the same group of buildings that were up for foreclosure last month, until the Boundary Waters Bank canceled the sheriff's auction. The company that bought them was incorporated only a few days before the auction was canceled, according to Minnesota Secretary of State's records.

Listing Rochester attorney Dan Berndt's office at the downtown Dunlap & Seeger Law Firm as its registered office, Second Street Parking filed for incorporation on June 6. Berndt was unavailable Monday to discuss the company or the project. No other names were part of the public filing.

Many speculate that the old hotels, the A & A Guest House and the handful of older houses will be demolished to make way for a new development.

While the company's name implies that parking is at least part of what is coming for the area, people connected to the project say they expect a new hotel.

Prior to the sheriff's auction being canceled, the land was described as "a prime hotel development site" in a real estate listing by Eden Prairie, Minn.-based Leines Hotel Advisors. The land was priced at $4.3 million in the sale brochure.

Developers are interested in building more hotels in Rochester due to growing population and the steady stream of visitors to Mayo Clinic.

A Holiday Inn Express & Suites opened last month a few blocks west of the Bell Tower properties, and the nearby Blondell Hotel was upgraded and re-branded as The Brentwood on 2nd. In addition, a La Quinta Inn & Suite is slated to be built in the Shoppes on Maine area in south Rochester.

Prior to the Boundary Water Bank assigning a receiver to take control of the properties, Mike Gillespie of Urbandale, Iowa, owned and managed the buildings.

He bought them in 2006 and 2007 to sell to a client who had plans to build a new commercial project there. The recession then caused the expected buyer to back out and Gillespie was stuck with properties that he had not expected to own for long.

The Bell Tower alone, which was built in 1910, cost him $2.2 million in October 2007.

Comic convention coming to Rochester's ' Underground city'

Local comics and fantasy fans have long been envious of the attention that larger cities in warmer places get from pop culture conventions, like the recent San Diego Comic Con.

Now it looks like they will have their one piece of the action right here in the Med City.

Bill Willingham, the creator of the wildly popular comic Fables as well as being a southern Minnesota transplant, recently told the Comic Con crowd that this was his last appearance at the San Diego event.

Most importantly for local comic and fantasy fanatics like myself, Willingham announced that he is organizing his own three day convention to be called, "Fabletown and Beyond."

It will focus on "mythic fiction" like his dark retelling of fairy tales and Neil Gaiman's "Sandman" series.

Here's the happy ending to this tale. This young Midwestern sibling of Comic Con will be held in downtown Rochester in March.

I got a kick out of how the comics site, bleedingcool.com, described the choice of Rochester as a venue.

"… The show will be held in Rochester, Minnesota. The facilities that have been chosen have been chosen specifically for the expansive indoor space, an underground city built for the wealthy visitors of the Mayo Clinic. This space will enable convention goers to remain indoors in the bitter Minnesota March."

Heh.

The Post-Bulletin will have more on this as it gets nearer. For more information, check out fablescon.com.

Action rolling under radar for Bell Tower Inn block

The talk along Second Street Southwest is that a development deal is moving ahead across from Saint Marys Hospital.

Things have been up in the air for a while for a cluster of six properties at Second Street and 12th Avenue that include the Bell Tower Inn and the Alpine Inn.

The bank that owns the mortgage on the block of properties appointed a firm to take over management of them earlier this summer, and then they were were scheduled for foreclosure and to be sold at an Olmsted County Sheriff's auction last month.

However, the bank canceled the foreclosure auction at the last minute.

Now the buzz is that the redevelopment of that area is moving forward following a deal being made to sell the high-profile properties. I'm tracking this to dig up details on the rumor.

Hopefully, I'll have something soon.

IBM earnings hold steady, despite weak revenue

Here's a take on IBM's quarter earnings report by the AP with a Rochester angle added.

Were there any other Rochester-specific aspects to this report that I missed?

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Technology business worldwide is sputtering, affecting the bottom line for many suppliers. But Big Blue is holding steady, despite weak revenue.

IBM delivered solid quarterly profits on Wednesday that easily surpassed Wall Street's expectations, even though it reported lower revenue because of economic troubles in some markets, lower hardware sales and the impact of a strengthening dollar.

Net income increased 6 percent to $3.9 billion, and revenue dropped 3 percent to $25.8 billion.

IBM was sufficiently encouraged by the results to slightly lift its guidance for the full year to "at least $15.10 a share," from $15 a share previously.

Success was partly fueled by several of the projects in which IBM's Rochester facility was a key player. That includes the Blue Gene super computing program that created Sequoia, which was recently ranked as the fastest computer in the world. In addition, revenue from the Smarter Planet initiative, which hopes to create interconnected, efficient systems, is up more than 20 percent in the first half. Cloud revenue doubled in that time.

The introduction of the PureSystems family of machines, which were designed in Rochester and are being made here, did not affect this quarter's earnings. IBM expects volume shipments of PureSystems to begin in the fourth quarter.

The quarterly result, said A.M. Sacconaghi, an analyst at Sanford C. Bernstein, pointed to "fortress IBM," a company whose profit performance seems all but impervious to industry cycles.

The company, Sacconaghi noted, has raised its full-year guidance in 12 of the last 14 quarters and met or beat Wall Street's average earnings estimate for 29 consecutive quarters. "It's boringly predictable," he said.

IBM is the largest global supplier of information technology — hardware, software and services — to corporations and governments.

In a statement, Virginia Rometty, IBM's chief executive, said the strong profit performance reflected the success of the company's "long-term business model." That model combines focusing on higher-margin businesses and faster-growing markets abroad with aggressive cost-cutting. The strategy has served the company well, with earnings improving steadily throughout the recession and financial crisis.

But the second-quarter report was also the fourth straight quarter that IBM's revenue has fallen below Wall Street's estimates. "But revenue growth is the missing piece of the puzzle in the long term," said Steven Milunovich, an analyst at UBS.

IBM share rose. At mid-morning today, shares were up $7.79, or 4.14 percent, to $196.04 a share. Wednesday, the company's stock price closed up $4.60 at $188.25 a share.

Back to the beginning - Fastenal's vending machines

I realize this is not really new info. Winona nuts and bolts powerhouse Fastenal has been intalling industrial 'vending machines' for the past few years.

But I hadn't really looked at this in depth. Vending machines accounted for about 20 percent of net sales this past quarter. Fastenal has 13,036 vending machines in operation right now.

"We believe industrial vending is the next logical chapter in the Fastenal story, we also believe it has the potential to be transformative to industrial distribution, and that we have a 'first mover' advantage. We are investing aggressively to maximize this advantage."

The cool thing about this, to me, is that Fastenal's founder Bob Kierlin actually envisioned vending machines as the original concept for the company in 1967.

The technology of that time made that problematic, so he decided to open stores.

And now his first idea is quickly becoming a major piece of the company's business.

I guess Kierlin's legendary frugality keeps him from throwing much away, even old ideas.

Countdown to Costco has begun

Costco fans might want to get out their calendars, because the countdown has started and their day is coming soon.

If an opening date posted on Costco's website proves accurate, Rochester shoppers could be rolling carts through its aisles before the holidays heat up.

Since Costco confirmed its plans to build a 150,000-square-foot store at the corner of 19th Street Northwest and West Circle Drive, the target opening date has always been vaguely stated as "by fall of 2012."

The Rochester store was not even on Costco's Coming Soon list as recently as July 10.

But the second-largest retailer in the United States has added Rochester to the end of the new store list on its website.

Opening date is listed as Nov. 16, 2012. That's a mere 122 days from today.

Construction of the store covering more than three acres plus a satellite gas station is picking up speed as this hot Minnesota July rolls toward August.

Construction watchers also can expect action on Kwik Trip's 108-acre West Circle Drive development to shift into high gear.

The building permit for the store's "structural shell," which alone is valued at $17 million, was first filed in April.

On Monday, a Blaine, Minn. company filed an application with Rochester Building Safety Department to get a permit to install Costco's plumbing. Just the plumbing work is valued at $500,000, according to the permit.

While Costco's construction picks up, so does the speculation about what other companies and businesses might be jockeying for position to build in its shadow.

No names or details yet on that front, but that could change quickly.

It is a safe bet that within 123 days, we'll know something more about Costco's future neighbors.