Brookings Marketplace development loses prospective anchor tenant
BROOKINGS — A hoped-for anchor tenant has decided not to build in Brookings, dealing a blow to the Brookings Marketplace development.
“The news of the anchor tenant electing not to move forward with the project came as a surprise and, frankly, a disappointment to all of us,” Patrick Daly, vice president of real estate development for Ryan Companies, told councilors at Tuesday night’s City Council meeting.
Councilors, on a 7-0 vote, approved changes to an earlier agreement that allows Ryan Companies to purchase 10 acres instead of 18.53 acres at the site, which is on the north side of Sixth Street just east of its interchange with Interstate 29.
Daly said his company, which is based out of Minneapolis, is far from giving up the ghost on developing the land, saying that the focus had now switched to two other prospective anchor tenants. He added that the reduced, 10-acre purchase remains just the first phase of the overall project, and that Ryan Companies still has plans to develop all 18.53 acres of the land.
“Please look at this project as an initial phase being the first of multiple phases, not as us just buying 10 acres and then not proceeding with developing the balance of it,” he said.
“Our hope is to, again, work with retail tenants on the overall site plan and be in position where we can be back in front of your development review team as soon as possible,” Daly concluded, adding that he’s hopeful site construction can begin next summer.
While the amended real estate purchase agreement received approval, its price — at $1.40 per square foot for a total of $609,840 — drew attention from a local developer.
“You purchased this land 10 years ago for $1.40 a square foot, and you’re saying 10 years later, it has not appreciated one cent in value,” Jacob Mills, vice president of development at Mills Development Co., said. “You think it’s worth exactly what you paid for it.”
He said there have been four land sales immediately adjacent to the Brookings Marketplace, with some going back as far as 17 years ago. All were for three to five times the value of the $1.40 a square foot. Mills said the most pertinent one was a 5-acre parcel sold in 2006 for $4.67 a square foot.
“Seventeen years ago — but a $1.40 is the best we can do?” he observed.
City Manager Paul Briseno noted the $1.40 per square foot sell price is just for the land, and that it doesn’t include other costs that Ryan Companies will have to take on in order to get the land into usable shape — and those costs include extending utilities and building roads.
“Doing our due diligence as a city, we have done analysis on what the cost of this site is and what the cost of this infrastructure is as well,” he said. “It’s substantial to develop this large of a site. So as Patrick from Ryan Company talks about the cost of $1.40 per square foot, that’s the initial cost. On top of that, you have a substantial amount of investment in infrastructure that needs to be offset and needs to be dealt with in order to fully develop the site.”
Briseno continued, “Mr. Mills is right — it takes time to develop these sites. I think this one has been in the works for, what, 15 years? Is that what I heard mentioned earlier? It’s going to take time, but you need to take the time to get it right.”
Ultimately, he said, the final decision on matters such as this rest with the City Council.
“The council is in the driver’s seat. The council makes the determination whether or not they approve, whether or not it’s something this community truly desires,” Briseno noted. “Moving forward with the option to sell the rest of the land, the council is always going to be in the driver’s seat. That’s the way we structured the agreement.”
Briseno, in an interview with The Brookings Register on Wednesday, said the change in plans for the Brookings Marketplace land doesn’t necessarily mean a slowdown in its development.
“The council approved the amendment (Tuesday) night,” he said. “It now has to go through the Brookings Economic Development Corp. Once it goes through (the BEDC), Ryan Companies intention is to bring back the site plan, and ultimately go through the planning commission and then ultimately back to the City Council. They’re hoping to do that in the January-February-March timeframe and then turning dirt sometime this summer.”
Briseno added that, looking at the bigger picture, overall economic growth in Brookings is going very well. He buttressed that view with numbers, pointing out that, through September of this year, development in the city has totaled $219,292,126 invested into construction. That number is much higher than all of last year, which totaled $73,091,254.
“The increased cost of materials and labor significantly impacts construction costs. We have three times the construction occurring than previous years,” he wrote in a follow-up email.
In closing, the city manager put a positive spin on the unforeseen developments surrounding the Brookings Marketplace.
“This might appear to be a setback, but the reality is, we’re continuing to grow,” Briseno said. “The ball was never dropped, and it will continued to be picked up and ran forward — especially knowing that we have a great firm like Ryan Companies perpetuating this project.”
In other business
Also at Tuesday night’s City Council meeting, councilors gave the green light on a 7-0 vote approving the city’s 2024 budget. It clocks in at $70,193,858, which is an increase of $8.5 million from its current budget.
— Contact Mondell Keck at [email protected].