Another round of commercial-industrial development may be coming soon to Dayton, a metro area hot spot for that type of construction.
DDL Holdings LLC of Bloomington wants to construct a 200,000-square-foot industrial building and five commercial buildings with a combined 150,000 square feet of space on a 29-acre development site near French Lake Road West and Dayton Parkway. Construction could begin in 2024 and “last for several years,” according to an Environmental Assessment Worksheet released Tuesday.
“The construction schedule will be confirmed as purchase agreements are obtained for the properties. Individual buildings will be built as the market allows and adhere to all city of Dayton zoning and building regulations,” the proposer said in the EAW, which describes the proposal as the “Dayton Mixed-Use Development.”
As part of an environmental review, the city is taking comments on the project through Nov. 16. The review looks at potential project impacts on everything from water resources and wildlife to greenhouse gas emissions and transportation.
Jon Sevald, Dayton’s community development director, said in an email Wednesday that there are “no applications for anything else” related to the project.
Finance & Commerce reached out to DDL Holdings LLC contact person Madhu Kolan for comment.
In the EAW, the proposer said the “purpose of the project is to provide needed commercial and industrial facilities to accommodate an increasing population in and around the city of Dayton. The project will benefit future and current city residents by increasing the tax base and providing local jobs.”
Dayton has been a go-to place for industrial development in recent years.
Recent projects include The Cubes at French Lake, which brought 1 million square feet of new industrial uses to a 65-acre site at 11500 Lawndale Lake in Dayton. CRG, the Chicago-based real estate development and investment firm behind the project, describes The Cubes it as the “first super bulk inventory distribution facility in Minnesota” and the “largest speculative industrial project ever developed in the state,” as Finance & Commerce reported in July 2022.
In the third quarter, the vacancy rate for industrial buildings was 4% metro-wide, up from 3.2% in the second quarter and 2.9% in the third quarter of 2022, according to Colliers’ 2023 Q3 Industrial Market report. Industrial vacancies are hitting double digits in some suburbs, including Dayton, which saw a pandemic-induced surge in new construction, the report notes.
Specifically, “Woodbury, Cottage Grove, Apple Valley, Shakopee, Dayton, Ramsey, and Otsego are each facing vacancy of greater than 10 percent. Being the primary targets for new industrial developments, these municipalities have greatly increased their industrial capacity since the COVID-19 industrial boom,” the report states.
But a Colliers market research analyst said in a recent interview that it’s “not an overbuilt situation.”
“Space is so tight that users are looking at new construction almost exclusively,” Jesse Tollison, Colliers market research analyst for the Minneapolis-St. Paul market, said in an Oct. 3 interview. “Those spaces that are available are often not suitable or not in a great location for the businesses. Most of the leasing activity we are seeing, a lot of absorption, is occurring in the new product. Essentially, things are being built and within a year or two they are being filled up entirely.”
Also noted in the Dayton Mixed-Use Development EAW:
- “The project area currently consists of an existing home and outbuildings, grassland, and wetlands. The adjacent properties to the west and south are industrial facilities. Properties to the north and east consist of croplands with single-family homes. Sidewalks will be constructed along the west side of the proposed development property as part of Dayton Parkway construction which will connect to French Lake Road. There are no parks, trails, or walks near the project area.”
- The project area is under one ownership and is currently zoned for agricultural uses. The development site is “planned to be rezoned as Industrial (I-1), Business Park (B-P), and Commercial (B-4).”
- “Potential construction and operation methods include clearing and grubbing, structure demolition, mechanical site grading, underground utility installation, bituminous paving, and concrete pouring.”
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