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Progress: Lakes area economy is red hot - Construction points to confidence, investment in future

Construction crews work inside the new Thrifty White Pharmacy building going up on the corner of Washington and North Second streets in Brainerd near Hardee's. Shingobee Builders Inc. is the general contractor on the project. Renee Richardson / Brainerd Dispatch1 / 9
Herberger's announced in the spring it would close its stores, sealing the fate for Brainerd's last major department store and beginning a protracted going out of business sale. Renee Richardson / Brainerd Dispatch2 / 9
Crews work at the Baratto Brothers project near Culver's restaurant on Dellwood Drive for the Northwoods Crossing development. Renee Richardson / Brainerd Dispatch3 / 9
Dick's Sporting Goods opened in Baxter near Costco, the last of the group of businesses in the new retail center with T.J. Maxx, PetSmart and Ulta Beauty. Renee Richardson / Brainerd Dispatch4 / 9
A car, topped with two kayaks, sits outside the Cuyuna Range Eatery in Crosby as an indicator of the recreation economy fueling the area's growth. Renee Richardson / Brainerd Dispatch5 / 9
Casey's General Store with groceries and prepared foods along with fuel stations opened in June just off Highway 210. Renee Richardson / Brainerd Dispatch6 / 9
Senor Patron's with its well-received Mexican food opened in the former TJ's Log Cabin in downtown Brainerd as an addition to the lakes area burgeoning dining experience. Renee Richardson / Brainerd Dispatch7 / 9
Construction continues on the expansion at Grand View Lodge resort in Nisswa with this recreation center in addition to a hotel and wedding chapel. Renee Richardson / Brainerd Dispatch8 / 9
Casey's General Store with groceries and prepared foods along with fuel stations opened in June just off Highway 210. Renee Richardson / Brainerd Dispatch 9 / 9

Small and mid-size business owners in retail and service industries and manufacturers in the lakes area agree the economy is cooking.

While motorists may remember the summer of 2018 for its challenges with major road arteries closed for construction, business owners may think of it as an indicator of investment confidence, job creation and record revenue.

"From my perspective, from the chamber's perspective, business in the Brainerd lakes area couldn't be much better," Matt Kilian, Brainerd Lakes Chamber of Commerce president said. Kilian said 2017 was a remarkable year for businesses.

"And this year, for a lot of them, has exceeded last year based on what we see in tourism and retail and capital purchases—and construction is a telling indicator of confidence in their business and the economy," Kilian said. "I hope it keeps going, but right now I think we are at a fever pitch and it doesn't seem to be showing any signs of stopping."

For workers, that means a plethora of opportunities. Hiring signs continue to be a common sight. Area manufacturers and restaurateurs point to the challenge in hiring to meet the demand or help fuel expansions. Businesses may point to 2008, in the superheated economy before everything came crashing down, as a record year. Last year, Kilian said, chamber members reported a best year ever and this year is exceeding that marker. Construction spending is a telling indicator of confidence.

And construction—noticeably absent during the Great Recession—is visible specifically in Brainerd and Baxter. Not only through the public investment in infrastructure with roads, roundabouts and trails—not to mention the publicly approved spending to renovate and build facilities with the recent referendum for the Brainerd School District—but in the private sector for residential, commercial, medical and commercial spending on construction, from Casey's General Store in Baxter to Thrifty White Pharmacy in Brainerd and a plethora of Dollar Generals across the lakes area communities. Other examples are the CentraCare Specialty Clinic in Baxter, the completed $7.7 million expansion of Essentia Health's Baxter Clinic, and groundbreaking for a Cuyuna Regional Medical Center clinic in Breezy Point. In Nisswa, Nor-Son crews are busy on a $30 million expansion to construct a 60-room hotel, wedding chapel and recreation center at Grand View Lodge. The expansion will allow the resort to accommodate as many as 1,500 guests.

Steve Mau, owner of Brainerd General Rental, also has plans for a major project to tear down his current building just off Highway 371 in Baxter and build a new facility on the same lot. Mau bought the business here in 2001 and while the business hasn't gotten back to where it was in 2008, Mau said last year was good and this year is shaping out to be even better.

So much better that Mau described it as red hot to the point he wondered if there was another shoe to drop in a market correction. And businesses are watching interest rates for increases, but Mau said there is optimism about the future.

"I'm feeling very positive," he said.

After the Great Recession hit, crushing construction and then nearly everything else, Mau said it wasn't until 2011 and 2012 when business got back to pre-recession levels.

"This year is as good as it gets," Mau said.

Another area feeling positive is the Cuyuna Lakes area. A recent Thursday night had lots of vehicles in Crosby loaded with mountain bikes and kayaks along with pedestrians and a large group of helmeted children riding their bicycles. Nick Miller, who is an owner of Prairie Bay's Iron Range Eatery in Crosby, said the expansion to the range has been a good one and the change is evident with the pedal and paddle economy blooming.

Tyler Glynn, economic development officer with Brainerd Lakes Area Economic Development Corporation, said another indicator is a rise in housing permits. Strong wages help people feel confident in establishing themselves as homeowners. There is a shortage of employees for manufacturing positions. But the draw of the lakes area is readily seen when Mike Bjerkness, workforce director at BLAEDC, posts a human resource director spot for area companies and gets 40, 50 and 60 applicants.

On the retail side, new businesses joining the community are also a sign of confidence both in this micropolitan, in central Minnesota growth and in their own ability to finance expansions and capital investments. The year started with Dick's Sporting Goods opening in Baxter. Ground was broken for a new retail development by Culver's in Baxter with a Sleep Number mattress store anticipated. Construction on a new car wash on an open lot near Radco is also expected to start soon in Baxter. Renewed development interest was expressed recently before the Baxter City Council for the open land just off Novotny Road in Baxter near Jack Pine Brewery.

Work is continuing on Washington Street with the construction of the new Thrifty White Pharmacy. Also anticipated is the redevelopment of the Gander Mountain site in Baxter. The Gander Mountain site is being redeveloped to serve as the retail home for several businesses—Gander Outdoors, Camping World, Overton's and a multi-tenant retail development. A building is also slated for construction next to the Caribou Coffee and Aspen Dental with considerable speculation on what that could be.

Among new businesses opening this year was the Casey's General Store. The store includes groceries and prepared foods, indoor seating, made-from-scratch pizza and doughnuts, chicken tenders and sandwiches and five fuel pumps just off Highway 210 in Baxter and brings Casey's back to the Brainerd lakes area. Casey's opened in June and reported hiring 20-25 employees with nearly 10 full time.

The number of dining options continued to grow and change with Senor Patrons adding a well-received Mexican restaurant menu to downtown Brainerd and with Country Kitchen taking on a new name with Baxter Cafe and Catering as Kevin and Marilyn Stumpf create a new chapter for their restaurant career here.

A number of existing businesses are adding to their offerings with Walmart installing a drive-thru for grocery pickup and Instacart offering grocery and product delivery from Costco and Cub Foods to homes in Brainerd, Baxter, Barrows, East Gull Lake, Lake Hubert, Pillager, Riverton, Merrifield and Loerch. For both residents and visitors looking for ways to save precious time, these services may find a following while helping residents who don't have easy access to either drive or haul their groceries home. It's just part of the ever evolving marketplace and the addition of services here. In some cases, companies found new homes like Sears' move from Baxter to east Brainerd.

Even with the heating economy, there are challenges. Erbert & Gerbert's Sandwich Shop closed suddenly, as did Papa John's and Burger King. Herberger's announced this spring it was closing all of its 250 stores, including Brainerd's last large department store. When Herberger's finally closes its doors in the Westgate Mall it will leave a large spot to fill and a vacant anchor position for the mall. It's unclear what the future may be and mall officials could not be reached for comment on whether the Herberger's site could become a single space to fill by a large retailer or become more than one space, like the other side of the mall changing from big box to Dunham's and Big Lots. There may be other opportunities as well, as lakes area history shows there is more than one option when looking at shuttered big box retail space.

Ascensus, one of Brainerd's largest employers, transformed the East Brainerd Mall space left vacant when J.C. Penney moved to Baxter, as well as the former Pamida store, into office space. Ascensus made the move from Baxter to Brainerd's east side in 2009.

The River to Rail initiative seeks to continue to build on momentum with Destination Downtown and the reinvestment in the city's core city blocks with a focus on the area between the Mississippi River and the former Brainerd railyard hub that is now the Northern Pacific Center with ideas for art, green space, trails, reinvestment. The beautification efforts are part of the goal to grow the tax base and attract workers to relocate here.

Updates to buildings were evident this year in the Brainerd Eye Care building, once the Greyhound Bus Depot, and in renovations to Laurel Street buildings from Sage on Laurel to the Koop Building, building on work by Joe and Nick Phelps, which created a home for the Crossing Arts Alliance and Lakes Area Music Festival space in downtown Brainerd last year.

All that work and voter approval this spring of the Brainerd School referendum, total proposals with costs and interest of $335 million is an attraction for further investment, BLAEDC's Glynn said.

He said it shows businesses coming in and people looking to move here, investing in the future and helping in economic development and recruitment. Glynn, who moved to Nisswa with his family about four years ago from Rochester looking for a better work/life balance and a quality area to raise children, said they've come to appreciate the lakes area much more now that they live here full time

The BLAEDC Unified Fund, combined from funding pools from local, state and federal resources, offers gap financing to assist businesses on projects with loans from $25,000 to $500,000. A key eligibility for applicants is in job retention or job creation. Glynn said to date they've made seven loans with $504,020 out to businesses throughout Crow Wing County. The projects have created 34 jobs and retained 37 in the area. The United Fund pool has $2.8 million.

"It's been very successful," Glynn said of the combined gap financing.

Overall, Glynn, who manages the Unified Fund and works with prospective businesses looking to locate and expand in the area, said more jobs are being created here. Glynn sees good, solid, steady growth ahead.

"My feeling is we are on the rise," Glynn said. "... This market is a solid market."

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