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Brian Martucci
BridgeTower Media Newswires
After years of pre-development work and mixed signals from the project developer, Chaska’s prospects for hosting one of the largest data center campuses proposed to date in Minnesota have risen significantly. Set on 70 acres north of Engler Boulevard and west of Clover Ridge Drive, the 1.4-million-square-foot CloudHQ campus would join other proposals by tech giants like Microsoft, Meta and Amazon for large-scale data centers on the fringes of the Twin Cities.
The Chaska data center’s Washington, D.C.-based developer is not a household name. But if it does move forward, the project will be the single biggest contributor — for now — to Chaska’s long-range efforts to build out a bustling business park on hundreds of largely agricultural acres west of Highway 212.
“That business park is an area of high focus and attention for us,” said Nate Kabat, Chaska community development director. In March, the city planning commission recommended approval of Hopkins-based building material manufacturer EDCO’s concept plan for a 240,000-square-foot office, production and warehousing facility on 28 acres of farmland south of the CloudHQ site. The new facility would replace one of EDCO’s two Hopkins properties.
At least one of Chaska’s current large employers sees opportunity in the city as well. In December, the full city council approved California-based health care company Beckman Coulter’s concept plan for a 148,000-square-foot addition to its manufacturing and sales facility on the north shore of Lake Hazeltine, in the city’s northeastern corner.
Both companies are seeking “opportunities in Chaska to expand their space and make it more modern,” Kabat said.
Too much of a good thing? Not in the long run
Chaska’s new business park will take shape in the city’s southwest quadrant, the focus of a major city area planning process last decade.
Since then, southwest Chaska has seen the bulk of the city’s greenfield residential development, Kabat said. Several mostly single-family communities are in active construction or recently completed there, including Rivertown Heights, Carlson Bluffs and Club West 11th.
Like neighboring southwest metro cities, Chaska is poised to continue what has already been a multi-cycle new housing boom, said Matt Mullins, vice president of business development at Maxfield Research.
National single-family housing developers have shown less interest in Chaska than in nearby communities like Waconia, Victoria and Carver, but the city’s pull is strong nonetheless thanks to its proximity to southwest metro employment hubs and Carver County’s lower property tax rates, Mullins said.
“That is a big advantage over Hennepin County,” he said.
Life in the area is increasingly pleasant and convenient for new and longtime residents alike. Chaska adopted an ambitious outdoor amenity plan last year and — along with nearby communities like Victoria — has invested heavily in a revitalized downtown, the subject of another master planning process last decade. The opening of a new Costco warehouse store on the city’s north side last July was an important psychological milestone for the city and a massive time-saver for residents accustomed to patronizing the busy Eden Prairie location.
“Everyone is thrilled about the new Costco there,” Mullins said.
While single-family comprises the bulk of new residential acreage in Chaska, the city has also seen an impressive amount of multifamily development lately — “maybe too much all at once,” Mullins said. The five recently- or soon-to-be-opened multifamily projects in town, such as Continental Properties’ 280-unit Springs at McKnight Lake, are driving concessions and elevated vacancies in the near term, though longer-term demographic trends should soften the blow, he said.
Big plans for a big business park
Over the next decade, southwest Chaska’s construction nexus is set to shift from residential to commercial and industrial. The first components of the new business park, including Oppidan’s multi-tenant Chaska Creek I and II buildings, are taking shape at the corner of Engler Boulevard and Highway 212. The Oppidan properties are nearing full lease-up, Kabat said.
The EDCO site lies to the west, on the other side of two existing commercial-industrial buildings. From there, city planners want to see development activity moving south, filling in the farms and wooded areas between Engler Boulevard and Big Woods Road and eventually down to Levi Griffin Road.
Chaska’s 2040 comprehensive plan guides much of the city’s southwestern fringe for “business park” development, and that’s likely to remain the case in the forthcoming 2050 plan, Kabat said.
The buildout won’t happen overnight, though. EDCO is closest to going vertical: Chaska city planner Liz Hanson told city officials in March that the company plans to start pushing dirt this summer. Sometime in the next 10 years or so, EDCO may pursue a 120,000-square-foot expansion nearby, EDCO Chief Financial Officer Travis Christl said at the same meeting.
The CloudHQ data center will probably be up and running by then, if work begins in the relatively near future. The company has site control, clearance to begin building a 30-foot berm along part of the site perimeter, and preliminary city approvals for “a project [we see] as pretty well-focused and informed,” Kabat said. Next up is final approval for the data center itself and a separate development process for a new electrical substation. But CloudHQ has not begun berm work nor given any specifics about when it plans to break ground.
Chaska is something of a regional data center hub already, Kabat noted in an interview with Finance & Commerce last year. The city already has three data centers, including one at 1708 W. Creek Lane that Texas-based Stream Realty Partners sold last year to an Iowa company in a $31 million, all-cash transaction.
“We have had success in drawing data centers due to land availability,” he said. “They appreciate that we want to see them here. We’ve been open about that.”
The fact that Chaska has its own municipal utility is a big draw for data centers, which consume huge amounts of power with very high uptime requirements. Chaska City Electric’s rates are lower than some surrounding utilities’ and power cooperatives’, and its small size makes it more responsive and reliable, Kabat said.
The city would be happy to see more data center proposals for its western business park, Kabat said. But they should be balanced out by other “high-end manufacturing and industrial” uses that tend to employ more people per acre, he added.
Plenty of other Minnesota cities and regional economic development agencies share that goal, Mullins said. Though Chaska and its neighbors to the south and west may never challenge the northwest metro’s industrial dominance, particularly on the spec-build front, its growing population could mitigate manufacturers’ concerns about labor availability and commute times in the long run, Mullins added.
“At the end of the day, industrial is a land and infrastructure play … the question is how much [cheap] land is available in Chaska versus further west,” he said.
