This rendering shows the view from Water Street at the intersection with Highway 19 (Submitted rendering: Oppidan Investment Co.)

Excelsior: More than a summer playground

Tuesday, December 9, 2014

Finance and Commerce

If you just crunch the numbers, a city of 2,400 people with limited highway presence and a small downtown shouldn’t be home to a new public library, a dozen restaurants and event centers, a brewery and enough retail stores to fill every available storefront.

A city this small shouldn’t be able to persuade one of the top grocery chains in the Twin Cities to bypass the highway and squeeze its newest store into a downtown site — and then lure the store’s developer to move its headquarters there as well.

Welcome to Excelsior.

Sure, it’s still a destination for people looking for summer fun along Lake Minnetonka. Today, however, it’s defying the curse of many historic business districts by becoming a vibrant, year-round hub for the southwest metro. And projections for future growth in the surrounding area have local leaders talking to the Metropolitan Council about parking and traffic solutions.

“I’m getting at least a call a week from companies looking for a place to locate,” said Laura Hotvet, executive director of the Excelsior-Lake Minnetonka Chamber of Commerce.

She notes that a year ago, owners Jim and Beth Ginther brought their environmental consulting company,U.S. Compliance Corp., and more than 30 employees from Minnetonka to the former Lyman Lumber office downtown. In September, medical manufacturer UltiMed Inc. moved its headquarters to Excelsior from St. Paul. New companies help make the city more than a summer playground for visitors.

“They bring in families,” Hotvet said. “They’re just injecting energy into the community.”

In arguably the most high-profile move, Minnetonka-based Oppidan Investment Co. has expanded its mixed-use redevelopment plans for the former Mason Motors dealership on the northwest corner of Highway 19 and Water Street. Two years after promising to find a grocery anchor for the development, Oppidan announced in September that Woodbury-based Kowalski’s would remodel the dealership into a 14,994-square-foot grocery store at 440 Water St.

Now the building is being demolished so Kowalski’s can invest in an 18,000-square-foot store, its first west of Eden Prairie.

Oppidan also announced it would move its headquarters to the second floor of the 20,000-square-foot office and retail building it is building on the same site. The company, which does $175 million in development a year, has about three dozen employees in Minnesota, California and North Dakota. Of the 18 employees in its Minnetonka office, about a dozen live in and around Excelsior, including developer Jay Moore, who’s managing the dealership overhaul.

“The reason we acquired it is because we wanted to bring a grocery store to Excelsior,” Moore said. When initial efforts to recruit a grocer failed, Oppidan received inquiries from other businesses.

“We had liquor, we had hardware, we had a church, we had a pharmacy,” Moore said. “It just didn’t feel right.”

Oppidan redeveloped a wing of the dealership — ironically a space built decades ago as a Red Owl grocery store – and has leased it to Steele Fitness, College Nannies and Tutors, Yoga Fit and a SportsClips location that is the busiest in the state, Moore said. The developer also is in talks to bring a restaurant and high-end salon to the main floor of its new headquarters.

Kowalski’s had talked about the Excelsior site with another developer in 2010, but the timing wasn’t right, said Mike Oase, Kowalski’s vice president of operations.

“We’ve always really been intrigued by that area,” Oase said. “Excelsior was a big piece of that. It was just a matter of getting things worked out on a site that size.”

Michelle Gudmundson and Wesley Uthus, owners of the fast-growing Primp women’s fashion chain, added a bright storefront at 50 Water St. to a lineup of locations in Minneapolis, St. Paul, the West End in St. Louis Park, White Bear Lake and Woodbury Lakes. The small city more than held its own in generating traffic.

“We opened May 2 and the response blew us away,” Gudmundson said. “We were above our projected goals significantly when the doors opened and it continued throughout the summer season.”

The only blank spot on this increasingly colorful canvas is a corner lot where developer Charlie James of Excelsior-based Thomas F. James Properties LLC has proposed a boutique hotel. City officials haven’t seen any progress on the project in recent months, but most people interviewed for this story say the city’s economy is strong enough to wait for the right project to come together.

“As long as nobody moves the lake, the city will do fine,” said Joe Schwartz, who can see the water from the Dunn Bros. coffee and wine shop he has owned for five years. This year he bought his building, which lies across the street from the Excelsior Dock Theater, a rare three-screen, first-run movie house right next to the empty hotel site.

Schwartz thinks demand for downtown space is so strong that something will be on that corner soon, even if it’s not a hotel.

“Excelsior is kind of the downtown for the Minnetonka school district,” he said, referring to a district that serves 9,600 students in 10 communities. While teens gravitate toward the fast-food spots at the intersection of Highways 7 and 101, adults come to Excelsior in enough numbers to support an eclectic mix of restaurant venues, some with live music.

The Hennepin County Library-Excelsior, which opened in a new building on Water Street in September, already is increasing its impact on downtown, according to senior librarian Peggy Bauer. Circulation in October was up 28 percent over October 2013, and the staff has issued 153 library cards in October, up 200 percent from the same month a year ago.

“It’s still going to be seasonal to some degree,” Schwartz said. For example, 2014 has been a strong year, except for January and February, when post-holiday cold weather kept customers in their homes or in warmer climes.

“That will really be the test,” he said of the deep winter months ahead.

Even that usual winter slowdown could be overshadowed soon by growth around the city. Highway 19 already handles 20,009 cars a day, said the local chamber’s Hotvet, who also serves on the city council in neighboring Shorewood.

She points out that the Minnetonka Country Club, which is set to close at the end of the year, is expected to be redeveloped, adding 100 or more households. To the west along Highway 7 in Minnetrista, work has started on the first phase of Woodland Cove, a new development planned to add 1,071 housing units on 490 acres over the next decade.  

“We have just recently met with Met Council about some potential for a multi-modal transit,” Hotvet said. Ideas include everything from maximizing trail access to trolleys or shuttles to bring drivers downtown from remote parking that also can serve commuters.

For now, the holiday lights are on and downtown Excelsior business owners are waiting to see whether the city’s reputation as a summer destination really is growing into success year-round.


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