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75 posts categorized "Economic development"

May 25, 2016

Hold the applause - New Buckeye name is not set yet

I was a bit premature Tuesday when I wrote that South Dakota developer Stencil Homes had re-named its Buckeye Apartments project in downtown Rochester.

F89c28e7467b81cdb720c0c067eca5d3_f252I spotted the project on Stencil's website labeled as Ovation on Monday. I wasn't able to reach CEO Nate Stencil for confirmation, so I reported that it appeared that the new name for the project will be Ovation.

On Tuesday, Stencil sent me a note that said I was partially right.

"On 'The Buckeye' name change, we are still not 100 percent set on the new name but I can tell you we will be changing it. We are currently polling different names and will soon have one nailed down," he wrote.

The name of a 92-unit apartment complex being built on the corner of Fourth Street and Third Avenue Southeast in downtown Rochester has been a sensitive issue for some of the neighbors. Stencil originally tagged it as Buckeye as a nod to the Buckeye Liquor store landmark that was demolished to make way for the project. Some in the neighborhood didn't think that was an appropriate name.

 

May 24, 2016

Bye Buckeye, hello Ovation?

The name of a 92-unit apartment complex being built on the corner of Fourth Street and Third Avenue Southeast in downtown Rochester has been a sensitive issue for some of the neighbors. 
F89c28e7467b81cdb720c0c067eca5d3_f252
South Dakota developer Stencil Homes labeled it Buckeye Apartments as a nod to the Buckeye Liquor store that was demolished to make way for the project. Some in the neighborhood didn't think that was an appropriate name. Now it looks like the developer has decided to try something different.

Stencil Homes' website shows a 92-unit apartment building as a Rochester project, but it's not called Buckeye anymore. The new name under the old rendering of the complex is Ovation.

This must have been a recent change. The Answer Man wrote about this on April 27 and Buckeye still was the moniker at that point. CEO Nate Stencil was not available Monday to answer questions about the Ovation name, but it looks like concerned neighbors should give themselves a round applause for the spurring a name change.

 

May 20, 2016

Mayo Clinic Ventures looks to Israel for collaborations

Looking to help boost a variety of medical start-up businesses, Mayo Clinic Ventures is targeting collaborations and investments in Israel with a new program.

The goal of the Mayo Clinic Israeli Startup Initiative is to work with companies either through sponsored research grants or co-development.  

Flags"Co-development can include licensing of Mayo Clinic know-how or an investment," explained Timmeko Love, of Mayo Clinic Ventures. "It's about matching the right opportunities with Mayo Clinic know-how for collaboration. It's all about finding the right strategic fit."

Candidates for the Israeli Startup Initiative can include very early stage companies to ones that are much further along in development. They can work in any area of health care. 

"We're not limiting our options," Love said.

The project announced this week actually is a new phase of an existing Mayo Clinic initiative.

It has been active in Israel for about a year, partnering with the philanthropic Merage Institute. The California-based Merage Institute awards up to $150,000 in annual research grants for Israeli companies working with Mayo Clinic. The most recent recipient was EyeYon Medical, which makes a noninvasive medical device to treat corneal edema.

Mayo Clinic Ventures recently took on the Israel initiative and that has put co-development on the table. That new approach is being launched next week in Tel Aviv at IATI-Biomed, Israel’s largest life sciences and technology conference. Mayo teams will meet start-ups to study their technology, and then consider making investments or collaborations.

This is first time Mayo Clinic Ventures has focused on one whole country for business opportunities, despite its long history of international projects. Many might not be aware of it, but Israel is a logical candidate for a such a relationship.

"It's a natural next step for us," Love said.

Israel is considered to be the worldwide leader in innovation in medical devices, biopharma, software and other types of health-care businesses. The U.S imported $600 million of Israeli medical devices in 2011. In 2015, Israel housed 725 medical-devices businesses with an overall total of 1,380 life-sciences companies.

While California's Silicon Valley is known as the hottest spot in the world for business start-ups, Israel is recognized as a close second. A 2009 book, "Start-up Nation," documents how Israel, with a population of 7.1 million, generates more tech businesses than many much larger countries.

"It's kind of a national sport in Israel," said Guy David, a professor of health-care management at University of Pennsylvania’s Wharton School. He was born and raised in Israel and tracks its medical businesses closely.

David said Israel's required military service coupled with an environment that encourages questioning and taking risks is a big factor.

"Israel is hugely innovative. The innovative spirit starts at a very young age," he said.

While launching technology companies is a big focus in the country, the entrepreneurs all know the market for their products or services is elsewhere.

"There is no market in Israel. Israel is tiny," said David. "If they invent something, they know it has to be a global product."

Does that mean businesses partnering with Mayo Clinic could open offices or build facilities in Rochester?

"That certainly could be a possibility. We do look at an economic development when considering companies," said Love. "But it has to make sense for that company. There would need to be a business reason for it."

 

May 17, 2016

Mayo Clinic to take over Biobusiness Center floor as Celyad pulls out

Mayo Clinic is returning to the fifth floor of Rochester's Minnesota BioBusiness Center, after a Belgium-based biotech firm left it empty for more than a year. 

In March 2015, the Rochester City Council approved a five-year lease for Mayo Clinic-linked Celyad to take over the fifth floor to create a prototype manufacturing facility that would add 33 jobs to Rochester.

CelyadCelyad's lease meant displacing all the Mayo Clinic workers based on that floor. Mayo Clinic moved its employees out at the start of 2015.

However, the project didn't go as planned. Celyad, formerly known as Cardio3, was unhappy when development costs came in much higher than the estimate provided by the city. 

051509biobusinesscenteratnight"The budgets we got far exceeded initial assumptions on which the project was decided," said Celyad CEO Dr. Christian Homsy in an email from Belgium in November. "Including the city support, the fit-out cost now exceeds the cost to do the same work in other locations where there is no city or state support."

Celyad halted the project before any construction work was done, so the 14,963 square feet of space remained just as Mayo Clinic left it. However, the biotech company did uphold its end of the lease and has been paying rent of $22,444.50 per month, or $269,334 per year. City officials say the company has made all of the required payments.

Since the end of 2015, the city has been looking for a new tenant to take over the fifth floor. Now, the city has approved a new lease with an old tenant.

The new deal adds the fifth floor to Mayo Clinic's lease, which already includes four floors of the seven-year-old building. 

"The lease amendment would provide for a rental rate of $17 per square foot for the 'premises,' which consists of the entire fifth floor. That rate would be in effect for a term consistent with the present term for the other four floors through April 1, 2029," according to the agreement approved by the Rochester City Council on Monday. 

Mayo-clinic-logoThat's $1 less per square foot than the $18 per square foot Celyad has been paying.

Before approving the new Mayo Clinic lease, the city council OKed the termination of the Celyad agreement. It called for Celyad to continue paying its regular rent through Sept. 30, plus "a lease termination fee" of $111,549.18. 

That fee will cover costs for the space from October to Jan. 1. Mayo Clinic will be building out the space starting in October and it will began paying rent in January. Mayo Clinic plans on using the floor to help teams that need more room.

"Planned occupancy will include relocating certain research support teams in need of additional office type space," stated Kelley Luckstein, of Mayo Clinic Media Relation, in an email.

Celyad's relationship with Rochester began in 2007, when it licensed stem-cell research by Mayo Clinic's Dr. Andre Terzic and Dr. Atta Behfar. It was called Cardio3 Biosciences back then. They have collaborated for years on the cardiopoiesis technology the company uses to repair patients' hearts by re-programming their own stem cells to regenerate cardiac tissue. Mayo Clinic owned 2.69 percent of Celyad as of March 3, 2015.

Beyond the fifth floor prototype manufacturing facility, the Celyad deal was designed to clear the way for the biobusiness to possibly build a 100,000-square-foot manufacturing facility with 350 employees in Rochester. That's what the company anticipates it will need if the Federal Drug Administration gives it a green light to take its stem-cell treatment to market.

Celyad's Homsy says Rochester now is out of the running for that.

"Celyad has assessed that a manufacturing plant in Rochester at this point of time cannot be justified.  We have opened an office in Boston from where our U.S. management is based, but we have delayed the decision on a manufacturing plant in the U.S. as we are able to manufacture all clinical lots out of our Belgian facility. As we approach commercial launch in the U.S., this situation may be revisited," he responded from Belgium by email.

Though the relationship between Rochester and Celyad has diminished dramatically in recent months, Homsy said it is not completely over.

"We continue to collaborate with Mayo Clinic, as well as with Andre Terzic, in the context of the evaluation of our CHART-1 data that should be disclosed by end of June 2016. If the data is positive, further development in the U.S. in the form of CHART-2, and, potentially, commercialization would follow," he stated.

May 10, 2016

$100 million development proposed near Saint Marys

A more than $100 million housing and commercial development is proposed for a high-profile corner of Second Street Southwest, next to Mayo Clinic's Saint Marys campus.

Development1The plans call for a 13-story building with two levels of underground parking to be built on more than two acres at the southwest corner of 14th Avenue Southwest and Second Street.

The Brentwood on 2nd and the Ray-Mar Motel stand on that corner. The hotels, along with some nearby houses, will be demolished to clear the way for the project. The Brentwood also houses several businesses, including City Market, Charlie’s Eatery & Pub, A Shared Smile and the Healing Touch Spa.

05-09 4Brentwood enWhile some details could change as it goes through the permitting process, the proposal includes 359 housing units with 310 "luxury" apartments in the tower and 49 connected townhomes.

The plan also includes almost 900 parking spaces, some of which will be public. The townhomes will act as a buffer between the parking and the Folwell neighborhood. The developers hope eventually to connect the project to Saint Marys Hospital via subway.

The tower on the corner is expected to include about 20,000 square feet of commercial space, including 13,000 square feet on the street level that will encourage sidewalk traffic with a restaurant and retail.

Development3"This project is completely different from than anything that has ever been built in Rochester," said longtime local developer Ed Pompeian. "This beautiful building will be first thing you see coming into Rochester from the highway, heading into the medical corridor."

Pompeian, along with his son, Nick, is partnering with a Twin Cities real estate development firm,  Alatus LLC, to create this project. The Pompeians lead a local investment group, 1406 Second Street Associates, which controls the hotels and all of the property where the project will be built.

Mayo Clinic is not directly involved with the project at this point.

'An amazing beacon for the area'

Alatus is well-known for handling massive developments, such as Mayo Clinic Square, Latitude 45 Apartments and The Carlyle condos in Minneapolis. It is led by founder Bob Lux.

"I think it's going to serve as an amazing beacon for the area," said Chris Osmundson, the Alatus senior development associate working on the project. "In real estate, it's always location, location, location, and this one's got it."

The Pompeians and Alatus have been working on this plan for about two years. They now are bringing it to the city for pre-development meetings, followed by the approval process. If everything goes well, they could start clearing the site for construction sometime this summer or early fall.

Estimating a 16- to 18-month construction period, Osmundson said it's possible the project could be finished by spring 2018.

This is the first major project pitched for that area since the implosion of a proposed Holiday Inn hotel complex late last year. That project struggled though the planning process and was criticized by some neighborhood groups.

However, these developers are optimistic, after getting positive feedback from the Folwell, Kutzky and Historic Southwest neighborhood associations.

"It was very refreshing for everybody. Support was literally unanimous from the neighborhoods. Great things can happen, if you take the proper steps," said Nick Pompeian.

Talks started more than a year ago

Don Nordine, president of the Folwell Neighborhood Association, said the developers started talking to his group about a year and a half ago.

"We like the project, even though it is really big," he said. Folwell includes 200 houses, while the project will have 359 apartments and townhomes.

While the group supports the project, that doesn't mean they still don't have some concerns, said Nordine. The public parking aspect of the development has residents worried about traffic.

"The city and the developer have to get this right. We want this to keep this neighborhood residential and quiet. I think they are open and honest, but the devil is in the details," Nordine said.

Jesse Welsh, president of the Kutzky Park Neighborhood Association, is also positive about her interaction with Alatus and the Pompeians so far. While they have not been able to schedule an official presentation with her association yet, Welsh sat in on a Folwell meeting and spoke with Lux. She plans to brief her association on the project at a neighborhood meeting tonight. Members of the independent Imagine Kutzky advocacy group also sat in on meetings and were supportive of what they heard, she said.

Traffic is also a concern for the Kutzky neighborhood, but overall, Welsh was pleased with Lux's approach.

"What impressed me the most was how well they've worked with Folwell. They understand how critical it is to work with the neighborhood," she said.

 

April 12, 2016

Mayo Clinic sells 4 lots for $720,000

Everyone knows lots of properties are selling in Rochester, though, in many cases, only the buyers know what is coming next.

Saint-marys-8colMayo Clinic sold three open lots plus one with a 97-year-old house in southwest Rochester for $720,000 on the final day of March.

The four parcels are on 14th Avenue Southwest, which runs along the west side of Saint Marys Hospital. Olmsted County estimates the total value of the real estate at $140,000.

Here's what Mayo Clinic had to say about the deal.

"We did sell four parcels recently (313, 317, 323 and 327 14th Ave, SW) to '1406 Second Street Associates.' You will need to contact the buyer’s representatives for any additional info/comment on their plans for the parcels," wrote Ginger Plumbo, of Mayo Clinic Communications, in an email response to questions.

Rochester developer Nick Pompeian, who owns the Brentwood on 2nd and Ray-Mar hotels at the corner of 14th Avenue Southwest and Second Street, is a representative of the local investors behind 1406 Second Street Associates.

He confirmed the purchase Monday, but couldn't discuss any future plans for the new property.

However, the real estate does seem to support the longtime buzz that a major redevelopment is coming for that ever-so popular block. 

As Destination Medical Center very slowly ramps up, the prospect of sitting in the shadow of Mayo Clinic's busy hospital has a lot of people eagerly putting together potential deals.

April 01, 2016

Bleu Duck Kitchen cooking in downtown Rochester

Two area chefs are creating a downtown Rochester restaurant to offer "an eclectic mix of adventurous and innovative comfort food" in a historic building.

Chefs Erik Kleven and Erik Paulsen are fulfilling their dreams of opening their own place, the Bleu Duck Kitchen, by taking over the entire first floor of the 115-year-old Conley-Maass building at 14 Fourth St. SW. That's the brick building being renovated by owners Traci and Hunter Downs

15.006_Final Model - Restaurant Image 1 (1)"This is a great chance to break out on our own," said Kleven, currently the executive chef at Four Daughters Vineyard in Spring Valley.

Creating a 60-seat "New American Bistro"-style restaurant with a separate special events space in the Conley-Maas building is a particularly good fit, said Paulsen. who also worked at Four Daughters as Riverside on the Root and Vintage in Lanesboro.

"The building is in tune with we're doing," he said. "We're going to serve classic dishes with new novel twists. We want to make interesting, but approachable food."

That translates into possible menu items, like chicken roulade with waffle bread pudding stuffing, maple syrup and collard greens or ratatouille with parmesan funnel cake and hollandaise whipped potatoes. They plan to use fresh, locally grown ingredients.

If everything goes according to plan, the duo hopes to have the Bleu Duck cooking by mid- to late August. Kleven plans to wrap up his transition from Four Daughters. They expect to have a staff of 25 to 30 working at the Bleu Duck.

Rochester architect Adam Ferrari of 9 Square is designing the restaurant with an emphasis on "letting the historic building talk." The plan is for exposed brick, mute tones with an emphasis on the kitchen.

"We'll have the focus on a bright, clean, white kitchen at the center," said Paulsen.

A small "Chef's Counter" will located by kitchen. Customers sitting there will be served special, chef-chosen dishes.

The front portion of the main floor of the building will house the dining room, bar and kitchen. The back area will be used for special private events with room to seat up to 100 people.

The pair chose the name to represent an adventurous approach to cuisine. While they were both at Four Daughters, they would have "Blue Duck" days for the staff to experiment and try out new dishes and techniques. The name cames from the Adam Sandler move, "Billy Madison." As an adult in a first grade classroom, Sandler's character drew a blue duck, "because I've never seen a blue duck." 

"We try to not take ourselves too seriously," said Paulsen.

The Conley-Maass renovation project has been lauded as an example of the kind of development that many hope Rochester's Destination Medical Center initiative attracts. The Downs see this new restaurant as being of the same spirit as their transformation of the older building into an innovative technology office center.

"We've been in discussions and talks with several interested parties about the space and it wasn't until we met the duo that we knew had the right match for the building," said Traci Downs.

 

October 28, 2015

New Roch. substation planned for Epic, Mayo Clinic growth

Mayo Clinic's partnership with Epic Systems, the largest electronic medical records firm in the United States, is driving the construction of a new $6.1 million Rochester Public Utilities substation.

Epic_Systems_112109_SignVerona, Wis.-based Epic Systems has been negotiating with RPU since June about the project. Epic says it needs more power capacity in the area to support future growth of the Mayo Clinic Data Center at 4710 West Circle Drive. The new Douglas Trail substation is slated to be built by the data center on land currently owned by Mayo Clinic.

The RPU board approved a "memorandum of understanding" about the project with Epic at its Tuesday night meeting. An escrow account already has been set up to fund project.

The memorandum states, "Due to the planned transfer of selected Mayo Data Center assets to Epic, Epic requests incremental electrical capability and capacity, needed to accommodate projected business growth in forward years…"
Epic has agreed to pay for the majority of the $6.1 million project, with RPU contributing $1.016 million for additional features that Epic doesn't need. The agreement also allows for Epic to apply  Mayo4710technologyparkfor up to $2.03 million in rebates over 10 years. The goal is to have the new substation up and running at least by April 1, 2017.


Rochester attorney Mark Utz spoke to the board as a representative of Epic. He said the deal  "Provides capacity not just for Epic, but a tremendous opportunity for the city of Rochester … to have a third substation in an incredible quadrant for Rochester. This is a win/win for the community, for RPU and for Epic."

Bruce Richards, Epic's director of facilities and engineering, assured the board his company is serious about coming to Rochester.

"This is a long-term situation for us. We're bringing in quite a few people to town," he said. "We'll start out with 80 to 90 people to the data center to work with Mayo Clinic."

Richards told the RPU board the additional capacity is needed for the potential that the current data center could grow to three times its current size.

Mayo Clinic built the $33.7 million, 60,000-square-foot computer support center in 2012. The data center was built to support all three of Mayo Clinic's campuses — Rochester, Jacksonville, Fla., and Scottsdale, Ariz.

"Epic is expected to take title of the property nominally in December 2015, with site grading to begin in spring 2016, according to the RPU/Epic agreement. The agreement also states that, "It is contemplated that the City of Rochester, for the benefit of RPU, will acquire from Epic the title of the real estate where the substation and related infrastructure will be located.

Richards did not elaborate on what Epic plans to do at Mayo Data Center, though remote hosting medical records is a possibility. In recent years, Epic built a massive data center in Verona, Wis. to offer remote medical record hosting for its clients.

6a00d83451cc8269e201b7c791bc82970b-800wiEpic and Mayo Clinic began working together early this year, when Mayo chose Epic to handle Mayo Clinic's electronic medical records. The relationship is developing into a close collaboration. Mayo's Chief Administration Officer Jeff Bolton has said that Epic has shown "a strong interest" in being part of the planned Discovery Square development in downtown Rochester. Discovery Square is part of Mayo Clinic's Destination Medical Center initiative.

Epic has about 8,000 employees and had $1.8 billion in revenues in 2014. Epic's software already is used by about 350 health-care organizations that care for 54 percent of U.S. patients.

Mayo Clinic is not Epic's only major partner in northwest Rochester. In May, IBM Watson Health, the health care unit of IBM, announced it has begun working with Epic as well as Mayo Clinic to add the Watson' super computer's cognitive capabilities to electronic health records. It's not clear if IBM is involved in the West Circle Drive data center project.

October 26, 2015

What's Mayo Clinic's plan for its new technology park?

Mayo4710technologyparkMayo Clinic is moving dirt and dividing up some open land by its Rochester data center at 4710 West Circle Dr. N.W.

However, details are sparse about the future of the site.

Mayo Clinic has submitted plans to the city for a "4710 Technology Park," a 22.5 acre tusk-shaped chunk of land north of the 4710 data center building.

The permit says:

 Final Plat #R2015-030PLAT to be known as 4710 Technology Park. The Plat proposes to subdivide three lots and one block for commercial development. The property is located at 4710 West Circle Dr NW.

I started asking Mayo Clinic about this project on Sept. 10. Mayo Clinic has not responded yet.
 
While no building is drawn on the plat, there are a series of driveways/st 10262015mayo4710techparkreets that curve around a space on Plot 2, that would seem to be designed to provide access to some sort of facility.
 
Mayo Clinic has certainly shown a lot of interest in that northwest area of the Med City for the past several years.
 
In 2000, it purchased a facility that Western Digital built at 4001 41st St. N.W.That became the Mayo Support Center, which houses Mayo Clinic's Dept. of Defense Medical Research Office spearheaded by Dr. Barry K. Gilbert.
 
In 2004, it bought a nearby complex at 3050 Superior Drive from Celestica. That eventually became the Superior Drive Support Center, which houses Mayo Medical Labs.
 
Mayo Clinic then built the 4710 Building, a data center, in 2012. It stands just north of the Mayo Support Center.
 
And now it is carving out a 4710 Technology Park by the 4710 Building.
 
In July, Mayo Clinic bought a nearby former mail processing center at 3939 Valleyhigh Drive. No word yet on how that will be used, though there is speculation that it could become a commercial laundry.

 

October 07, 2015

The 5 top Rochester real estate sales in 2015 so far

• $15 million - Maplewood Square sold on Sept. 29.

Sold_sign• $10 millionMiracle Mile shopping center sold on May 15.

• $7.2 million - The Hampton Inn at 1755 S. Broadway sold on Feb. 6.

• $5.4 million - Former Menards store at 5150 U.S. 52 North sold on March 17.

• $4.5 million - Prosthetic Laboratories center at 121 23 Ave. S.W. sold on Jan. 30.