Duluth building boom reaches new heights

While 2020 will be remembered as a slow and trying year for many industries, it was a sprint for Duluth's construction trades. That year, the city of Duluth issued permits for construction projects collectively valued at more than $399 million — an all-time high.

Building activity for the year eclipsed the previous record set in 2010, when permits were pulled for nearly $277.5 million worth of work, including a new airport terminal and several large school projects.

Essentia Health's $240 million investment in its downtown medical campus accounted for a disproportionate share of 2020's workload. But there were other large projects in the mix, as well.

Although 2020 would seem hard to match, the pace of construction is unlikely to slow in the year ahead, predicted Wendy Rannenberg, manager of Duluth's construction services and inspections division. She noted that the city still hasn't issued the biggest building permit Essentia will need to pull for its three-year project.

Craig Olson, president of the Duluth Building and Construction Trades Council, said workers have risen to the challenge "without missing a beat," despite the COVID-19 pandemic. Construction continued throughout the year, as people in the trades were considered essential workers. Olson said for the most part workers remained safe at their work sites with the help of strict protocols, although he acknowledged a few scattered infections.

Duluth's construction calendar held remarkably strong through the year, compared with some other Minnesota markets.

"I'm hearing from my counterparts in the Twin Cities that they're seeing something like a 30% decline in hours, and we haven't seen that. It seems like we're one of the brighter spots in the state. Maybe Rochester is, as well," Olson said.

That's not to say Duluth's construction scene has been immune to the effects of the pandemic.

"Plenty of projects were delayed because of it. UMD pulled some of their projects, but I think they're going to get back on track," Olson said.

Other postponed projects include a proposed 15-story high-rise apartment building in the 300 block of East Superior Street and a student housing development next door to Lake Superior College.

"We're just hoping we get this pandemic under control. At least it looks like we're heading that way," Olson said.

"When you look at the breadth of activity construction-wise across this community, it's impressive," said Adam Fulton, deputy director of Duluth's planning and economic development division. "For example, we've got a new hotel going in by the mall. That's not a cheap project. So, it really is across the whole community. It extends all the way west to the Morgan Park Apartments, which are coming along at a site where a school building had been sitting vacant."

On the far other side of town, Fulton pointed to Lake Superior Brewing Co.'s plan to redevelop a Lester Park fitness club into a brewpub.

While the overall construction scene in Duluth appears relatively robust, the number of permits issued for new housing slipped substantially in 2020. For the year, 151 units of new housing were permitted, including 31 single-family homes. By comparison, permits for 524 units of housing, including 58 single-family homes, were issued in 2019.

But Rannenberg pointed out that permits often are issued far in advance of new housing coming onto the market. To illustrate the point, she pointed to Vue at Bluestone, which pulled permits in 2019 for a 193-unit apartment building that is expected to be ready for occupancy later this year.

"Some of these projects take a long time," Fulton said. "When you look at how things happen, in fits and starts, what you're going to see is maybe a slight slow-down in 2020's numbers. But 2021 we anticipate to be significantly higher."

"We have many projects that we anticipate proceeding in 2021 that will, I think, probably be closer to those 2019 numbers than what we saw in 2020," Fulton said.

"It is simply a matter of the halting pace at which projects proceed," he said.

Demand for skilled workers in the building construction trades has been intense at times, but Olson said that has not appeared to be an impediment to moving projects forward. He acknowledged workers from outside the region have been needed to keep some of the work on track, especially considering several large projects currently under way in the Northland, including the Husky Refinery in Superior and an Enbridge pipeline.

But Olson said local workers have stepped up in strong numbers, as well.

"We're not having any trouble recruiting. Some places around the country they are. But we have a lot of young men and women that want to make a career in the trades," Olson said. "We've had no shortage of applications."

1. Essentia Health: $240.7 million
2. Costco: $13.6 million
3. Birchwood Apartments: $6.7 million
4. Decker Dwellings $4.7 million
5. The Bluffs Senior Living: $4.1 million

Source: city of Duluth

1/2: A new car wash along Central Entrance is one of the current construction projects in Duluth. (Steve Kuchera / skuchera@duluthnews.com) free card

2/2: