Maurices to be major tenant at planned downtown Duluth office tower

• AtWater Building

An architect’s rendering of the proposed office building for 425 W. Superior St. that will be constructed by the AtWater Group. (Image courtsey of Krech Ojard)

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That major tenant going into the 15-story office tower planned for downtown Duluth?

It’s Maurices.

Those involved in the planned “Duluth Corporate Tower” project wouldn’t say who the major tenant will be until it’s officially announced today during a celebration at the site.

But the secret had slipped out by Thursday evening. And the city’s application for the $8.5 million State Capital Projects Grant it received makes it clear: Ascena Retail Group, Duluth-based Maurices’ parent company, is driving the project and will take up more than half of the building.

It plans to invest $30 million of the $80 million project cost. And it plans to take up 180,000 square feet of the building’s 300,000 square feet, the grant application to the Minnesota Department of Employment and Economic Development shows.

Maurices, which has about 800 stores, would move its corporate headquarters from three smaller buildings three blocks away on Superior Street to the new office tower at 425 W. Superior St. when it’s completed in 2016. And the company will be taking its current 350 employees with it.

But its staff also handles back office operations for parent company Ascena. And that’s expected to increase big time with Ascena’s recent acquisition of Charming Shoppes Inc., which owns several women’s clothing store chains.

“Plans call for 150 additional jobs to come to Duluth over the next three years, but only if we have the space and facilities needed,” Maurices President George Goldfarb wrote in an Aug. 10 letter to Gov. Mark Dayton. “Otherwise, they could end up in New Jersey or Ohio.”

Goldfarb was referring to Ascena offices in New Jersey or Ohio that have plenty of room to grow, unlike Maurices offices in Duluth centered at 105 W. Superior St. Ascena also owns the Dressbarn and Justice chain of retail stores.

That not only means new jobs could go elsewhere, but keeping the Maurices’ jobs in Duluth is also at risk. So a lot is at stake besides revitalizing downtown’s West Superior Street. And letters with the grant application made that case to the governor.

IS BARR ENGINEERING NEXT?

Gov. Mark Dayton announced the Duluth project Thursday as one nine funded by a $47.5 million pool the 2012 Legislature set aside to pay for projects expected to spur private economic development and create jobs.

Fully occupied, the building is projected to keep 500 professional jobs in Duluth and create about 250 more jobs, with average wages of $56,300, the grant application says.

Two other tenants already are lined up besides the major tenant (Maurices/Ascena), said Brian Forcier, president of the AtWater Group, project developer and owner of the current building on the planned tower site, which has been largely empty for years. Together the three would occupy 75 percent of the building.

Supporting documents show there’s more interest in the building, including Barr Engineering Co., which has offices a block away at 332 W. Superior St.

“Barr Engineering has experienced substantial growth in recent years and we have an urgent need to find accommodations that can house our growing staff in Duluth,” Gregory D. Keil, Barr’s chief operating officer, wrote in an Aug. 8 letter to AtWater.

In the letter, he said Barr’s Duluth staff has grown from 20 employees in 2006 to about 90 today. The company is interested in leasing 30,000 to 40,000 square feet of space with an additional 12,000 square feet for future expansion of 50 more employees. Those new positions would primarily be in engineering and environmental science, supported by paraprofessionals and administrative staff.

“The 425W building would provide an ideal opportunity for Barr Engineering to maintain its Duluth operations in one location,” Keil wrote.

VACANT SPACE CREATED

But moves by Maurices and potentially Barr Engineering from their current offices downtown to the new office tower, would leave substantial vacant office space in the heart of downtown.

Maurices owns and occupies space at 101-105, 106 and 117 W. Superior St., with a total assessed value of nearly $3.8 million, city property records show. The 105 W. Superior St. site is where founder Maurice Labovitz opened the first Maurices store in 1931. Maurices moving out of all three sites probably would create about 100,000 square feet of vacant office space downtown.

Mayor Don Ness said such details will be worked out in the weeks and months ahead.

“Competition is a wonderful thing,” said David Ross, president/CEO of the Duluth Area Chamber of Commerce. “If there are businesses that relocate from other buildings downtown, it’s because it’s attractive to be here.”

With space options opening up, he said building owners will work harder to keep their tenants. And those with vacancies will adjust and find other tenants.

“I can’t see any downside to this,” Ross said.

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