The final pieces of the Costco development in northwest Rochester are slated to be built this summer, starting with a new hotel.
A South Dakota-based developer, SD Rochester LLC, purchased land between the Comfort Inn and McDonald's along West Circle Drive from Northwest Investments of La Crosse for $1.45 million on Jan. 15.
According to city documents, the firm lead by Dan Henderson is planning to build an almost $6 million, three-story hotel under the dual brands of Sleep Inn and MainStay Suites. It will join two hotels — Comfort Inn and Staybridge Suites — built last year.
"They are a highly sophisticated group. I think this will be a good project," said Hans Zietlow, of Northwest Investments. "They got a pretty key piece of property."
Zietlow began carving the development out of a farm field for Northwest Investments in 2010. Northwest Investments is the real estate arm of Kwik Trip Inc. Zeitlow typically handles land planning for the Wisconsin convenience chain's stores, so this was not his usual type of project.
Starting it during a recession gave it a slow start, but a recovered economy plus a prominent anchor such as Costco has made it a hot property.
"Once or twice in your life, you have way more buyers than land to sell. Then you get to be picky about selling property," he said. "This is one of those times for me."
Beside the addition of the third hotel, a multi-tenant center also is slated to be built by Aldi this summer by a Twin Cities developer. There's no word yet on what retailers or restaurants it might house.
"I think that one will take off like a rocket," Zietlow said.
With the Costco development pretty much wrapped up, Northwest Investments is turning its attention to a nearby 50-acre property at West Circle Drive and Valleyhigh Drive. They have started the planning process to add roads and utilities into the area to prepare to sell lots, just as they did at the larger Costco property.
If things go as expected, construction could start there yet this year.
"There's a lot interest in that area, particularly since the new Hy-Vee opened," he said.
Zeitlow and Northwest Investments have driven a lot of change along Rochester's West Circle Drive area, and now more is one the way.
"Anyone looking for a place to build in Rochester now has to look at Northwest before they make a final decision of where they are going to go," Zietlow said. "That wasn't the case 10 years ago."