Developer A&L Properties has an additional 60,000 square-feet of Class A commercial-retail space ready for tenant build out in the downtown Duluth business district, and is beginning Phase II of its Wieland-Hayes Block project for 2009 occupancy.

The $25 million development is remaking the lower side of Superior Street in the block between Lake Avenue and First Avenue East. The $15.6 million two- and four-story Phase I components (three and four levels on the lower Michigan Street entrance) nearly is ready for occupancy. Phase I is an historic preservation of two adjacent structures built in 1889 and the early 1900s.

“It’s a unique building. There’s a lot of vacant (downtown) space, but nothing like this,” said Katherine Marinac, A&L’s property management and leasing manager. “It will have the feel of a 100-year-old building with Class A amenities. We’ve had a lot of interest.”

Marinac didn’t say how much of the new space is leased, but noted the larger Duluth Technology Village that A&L developed as Class A space on the upper side of the block in 2000, is 95 percent occupied.

The Duluth office of Kraus-Anderson Construction Co. is the general contractor. Jamar Co. is the mechanical subcontractor and its sister affiliate, APi Electric, is the electrical subcontractor.

The three contractors also will build the 40,000 square-foot Phase II. It will have a broader footprint along Superior and Michigan streets, and a setback further from the Superior Street sidewalk, than was originally planned.

The original design envisioned a courtyard between Phases I and II. But with the modified design, Phases I and II will butt together. The deeper setback will make room for a recessed, 20-foot deep courtyard in front of Phase II. The courtyard will lie behind a wrought iron fence along Superior Street.

“It will give (the building) a look almost like an embassy,” Marinac said.

Rich Noble, A&L’s construction manager, said subsurface issues and the location of Minnesota Power’s main downtown power feed along Michigan Street forced the change. “It would have cost us $1 million to relocate their underground power lines,” he said.

Phase II will offer 1st floor office/retail space; 2nd floor office space; and 14 condominium units on the top two floors.

A&L had considered rentals but has decided the market will be stronger for mid-priced owner-occupied units, Noble said. “The downtown (rental) housing market is still untested. We have our price points in line with equivalent single-family housing, in the $200,000 to $400,000 range,” he said.

That’s well below the upscale units that many other condo developers have built with waterfront views, initially priced to sell at $600,000 and up.

With the economy stalling out, the high-end housing market has tanked, forcing those developers to rent some of their unsold new units. A&L expects demand to be there when its mid-priced units hit the market in mid-2009.

A&L Properties’ principals are Lee Anderson, and Rob Link. Anderson is president of APi Group, the St. Paul-based construction and construction supplies firm, which includes the Jamar and APi Electric units in Duluth. Link managed Jamar and its subsidiaries before teaming with his boss as a developer.

Lakewalk Building II

One of their earlier projects was Lakewalk Center at 1420 London Road, which they developed with Duluth plastic surgeon Andrew Baertsch, MD.

They opened it in 1999, it quickly filled, and A&L has since sold its interest to the surgeon.

Now the trio is developing a slightly smaller $12 million Lakewalk Building II next door, which also will be ready for occupancy in mid-2008.

A&L is the manager and leasing agent for Lakewalk Center and will play the same role at Lakewalk II. Marinac said just 1,500 square feet of space is vacant in Lakewalk Center and serious negotiations are underway for half of the space in Lakewalk II.

Kraus-Anderson, Jamar and APi Electric again are the principal contractors.

A&L also is developing an 18,000 square-foot clinic building for the St. Mary’s/Duluth Clinic (SMDC) Health System in Lakeside that will open in fall 2008. SMDC will be the sole tenant. The new building will replace SMDC’s Lakeside satellite clinic at 4621 E. Superior St. Johnson Wilson Constructors is the general contractor.

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