One of the largest industrial employers in Minneapolis will vacate its Ward 3 campus in 2027, creating a rare opportunity for large-scale redevelopment — or reindustrialization — near the heart of the city.

Graco’s decision to close its 80-year-old headquarters and manufacturing facility along the Mississippi riverfront surprised few close observers of the publicly traded company, which has been building out office and industrial space in the northwest metro for several years. 

But while it’s a good thing for Minnesota that Graco is staying local, the loss of hundreds of living-wage blue- and white-collar jobs near downtown is nonetheless impactful, Minneapolis Director of Community Planning and Economic Development Erik Hansen said in an interview. Because it’s already zoned for industrial use, the Graco site would be a natural fit for another manufacturing employer, he said.

“That is the expectation right now,” he said. “Production and processing land is at a premium in the city … it is important to have those kinds of jobs in Minneapolis proper.”

That expectation could run headlong into the reality that the sprawling manufacturing facility occupies a prime parcel just upriver from the booming North Loop. 

In public statements following Graco’s May 21 announcement, elected city officials nodded to the likelihood that the site will draw intense interest from developers with more ambitious visions for what’s possible on the 40-acre site.

“As a site for housing, how can you beat it? It’s in a great area of town next to the river,” Ward 3 Council Member Michael Rainville told the Northeaster. “Maybe we could do a little more park land there. And there’s room for all kinds of small businesses, shops and stores…it’s an urban planner’s dream.”

Without committing to a specific development vision, Mayor Jacob Frey told the Star Tribune that the city is “excited about the potential this nearly half-mile stretch of riverfront holds for our city — an extraordinary opportunity along the most epic river in the world.”

Could the Graco site stay industrial?

Those statements are not necessarily in conflict — and the site’s future remains very much up in the air.

Graco has made a firm decision to sell the property but is “not in active conversations with potential buyers, and no decisions have been made about the future use of the site,” Graco spokesperson Kirstie Foster said in an email. 

Graco will engage with city officials “and other stakeholders” to ensure “a thoughtful, coordinated transition,” she added. Hansen said Mayor Frey would meet with Graco officials this month to learn more about their plans.

Industrial reuse is a real possibility given the site’s long manufacturing history and heavy power service, a must-have for energy-intensive industrial facilities, said Chris Hickok, managing director and industrial market lead for the Minneapolis office of JLL, a global commercial real estate firm.

But with at least 400,000 square feet of usable indoor space, the pool of local industrial buyers or lessees is pretty well constrained if the main building isn’t going to be split up into smaller tenant spaces, Hickok added.

“That is a big building for our market — we don’t have a lot of lease transactions north of 250,000 square feet, and [at that size] they tend to turn into build-to-suits,” he said. The sorts of manufacturers that need truly gargantuan facilities tend to prefer the Rust Belt or southeastern United States, where population growth and existing heavy industrial capacity make it easier to scale massive manufacturing operations, he added.

Hickok said other possibilities include a “last-mile distribution center” or data center.

On the latter idea, the Star Tribune reported in January that data center developers have proposed at least 10 large-scale facilities in recent years, mostly on the fringes of the Twin Cities. Though Minnesota is not yet a major data center market, developers and their customers like the state’s cold climate, which reduces winter cooling costs; relatively clean electricity supply, which aligns with big tech companies’ ambitious environmental goals; and favorable position on a “fiber highway” connecting Seattle and Chicago, which enables high-bandwidth, near-real-time computing applications.

It’s unclear whether Northeast neighbors would welcome a data center on the Graco site, however. Data centers’ often prodigious water usage has emerged as a major concern for local residents and lawmakers. So have concerns around noise, power consumption and low job density, a possible sticking point for city leaders seeking the highest and best use for the Graco property. Hansen said the city of Minneapolis has not yet evaluated the site for a data center.

Any future industrial user would need to consider how much of the existing building stock they could reuse and how much retrofitting and general site work would be needed to suit their purposes, Hickok said. With vast amounts of expensive, sensitive computing equipment at stake, data center users would look particularly closely at the low-lying site’s flood potential. At some point, he said, industrial reuse could prove unworkable.

Another Twin Cities industrial expert agreed with that sentiment and suggested the city’s long-term interest would be better served by residential or mixed-use redevelopment.

“I love this site for industrial, but I believe the highest and best use would be for apartments or condos,” Dan Friedner, senior managing director for Newmark’s Minneapolis-St. Paul office, said in an email. “Maybe mixed-use due to the fact [that] it is on the river [and] you would think there would be a market for restaurants on the ground level.”

A ‘smaller version’ of Highland Bridge?

It wouldn’t be the first time this century a large, river-adjacent industrial site got the mixed-use treatment in the Twin Cities. 

St. Paul’s troubled Highland Bridge megaproject is the best-known of these, but Upper Harbor Terminal in North Minneapolis is closer in scale. At full buildout, the site plan for the 48-acre former shipping terminal calls for a nearly 20-acre riverfront park, 520 units of mixed-income housing, an entertainment venue operated by First Ave., a community wellness center, and tens of thousands of square feet of production/processing and ground-floor commercial space supporting at least 300 jobs onsite.‍

Hickok said the Graco site’s proximity to the North Loop and established Northeast neighborhoods means it could likely support even more housing than Upper Harbor across a variety of formats, along with a grocery store, other retail and possibly office uses.

“It’s a smaller version of the Highland site in St. Paul [in a] better location overall,” he said, referring to the 122-acre redevelopment of a former Ford Motor Company plant in the capital city’s Highland Park district.

If market conditions allow, the apparent certainty that Graco will vacate and sell the site means redevelopment could begin fairly soon after 2027, Hickok added. By then, potential buyers should have solid, market-tested proposals for the site.

Though Hickok said Minneapolis would likely require a formal and highly detailed environmental analysis, Hansen indicated it would not be as closely involved in the development process itself as with the city-owned Upper Harbor property.

“The city is simply open to being part of the conversation and seeing where we can be helpful [to ensure] an active site contributing to the tax base and vitality of Minneapolis,” he said. The sort of tax increment financing framework that supported Graco’s most recent expansion remains a remote possibility, though not out of the question for the right project, he added.

One thing that is likely to factor into any redevelopment: more green space.

“I’m expecting based on current market trends that whatever occurs there will need a public realm element because that’s what people want,” he said.