Posted October 6th, 2026 in Top Stories, Legal Insights with Tags commercial real estate

For Developers, Project Feasibility Is More Than a Land Use Question

A recently proposed data center at the Minnesota Star Tribune’s former printing plant offers a vivid reminder that a real estate project can make sense on paper and still encounter obstacles that threaten its economic viability.

Virginia-based Legacy Investing signed an agreement this summer to purchase the 13-acre site on the north edge of downtown Minneapolis, one of the last large industrial parcels in the North Loop. The company planned a roughly 20-megawatt data center, along with additional mixed-use development on nearby parcels. The Star Tribune said the sale was expected to close in the fourth quarter of 2026, subject to provisions including city approval of a conditional use permit.

However, after hundreds of residents raised concerns at neighborhood forums about environmental impacts and the site’s best use, Legacy withdrew its land use application in September and backed out of the transaction.

The experience illustrates a broader lesson for developers, investors, landowners, and their counsel: securing land, assembling financing, and identifying a permitted or potentially approvable use are only part of the feasibility equation. Regulatory, infrastructure, political, community, and timing risks can intersect, and a setback in one area can quickly affect project costs, financing, timing, and ultimately the business case itself.

Those risks arise across asset classes, although they may take different forms. Data center developers, for example, may face questions about utility capacity, infrastructure demands, environmental impacts, and community acceptance. Developers converting obsolete office or commercial buildings to new uses may confront construction feasibility, zoning constraints, historic preservation requirements, complex capital stacks, and more.

Data centers make those interdependencies particularly visible. Their impacts may extend beyond the boundaries of the development site, requiring local governments and neighboring property owners to evaluate electrical and water demand, infrastructure improvements, traffic, environmental effects, tax revenues, and implications for surrounding development. Those questions may become especially significant when the proposed location is a prominent or scarce redevelopment site.

Diligence Starts Before the Application

Early conversations with municipal staff, elected officials, utility providers, neighboring owners, and community organizations can serve an important diligence function. The objective is not necessarily to eliminate every objection. Instead, developers should understand which concerns are likely to affect the approval process, what infrastructure or regulatory constraints may exist, and whether the project can address those issues without materially changing its economics.

The Minneapolis proposal also demonstrates that a strong economic rationale for a project may not, by itself, resolve those concerns. Legacy’s representatives argued that the facility would use only about as much water as two homes and would help catalyze nearby development. Legacy had also previously developed a slightly larger data center in downtown Minneapolis. Community opposition nevertheless remained strong.

Different Projects, Similar Feasibility Questions

The same feasibility questions arise in very different forms across other types of development. Office-to-residential conversions, for example, are showing momentum in Minneapolis and St. Paul, with projects such as Galtier Plaza and the Grain Exchange building moving toward construction and expected to add hundreds of apartments downtown.

Conversion projects, however, can depend on complex combinations of historic tax credits, C-PACE financing, bridge and bank debt, municipal approvals, and public-sector participation. They may also require developers to solve difficult physical questions involving floorplates, building systems, parking, windows, and other features designed for an entirely different use.

In those projects, the development question is not simply what a building could become. It is what the building can become at a cost, on a timeline, and within a financing structure that the business can support.

Build Uncertainty Into the Deal

That distinction has significant implications for deal structure. Real estate counsel should treat development uncertainty as a business risk rather than solely as an entitlement issue. Purchase agreements and site-control documents should address approval deadlines, extension rights, deposits, diligence periods, regulatory changes, carrying costs, and termination rights. Where utility commitments, governmental incentives, financing, or other third-party actions are critical to a project, the agreement should also account for the possibility that those elements may take longer than expected or may not materialize at all.

Timing is particularly important. A moratorium or governmental delay may slow the approval process, but it does not necessarily stop the financial clock. Legal, engineering, environmental, utility, financing, and other costs may continue to accrue while approvals remain unresolved. The same is true when infrastructure constraints, community opposition, financing conditions, or construction issues lengthen the development path or make it less certain.

Sophisticated agreements therefore address difficult questions before they become disputes. Who bears the cost if the project takes twice as long as expected? How long can a buyer control the property, and what does the seller receive during that period? What happens if a required utility commitment, financing source, or governmental approval becomes unavailable? And what happens if the project becomes economically or politically impracticable, even though development remains technically possible?

Whether a buyer may walk away, when, and at what cost should be negotiated at the outset, not discovered under pressure.

From Approvals to Economic Viability

The broader lesson applies across development types. Projects rarely fail because of a single isolated issue. More often, regulatory, financial, physical, infrastructure, political, and community considerations combine to affect timing, cost, and feasibility. Identifying those interdependencies early allows developers to evaluate not only whether a project can be approved, but whether it can be approved and completed on terms that still make economic sense.

For developers and their counsel, diligence should therefore extend beyond determining what the law permits today. It should also examine what approvals, infrastructure, financing, stakeholder support, and contractual flexibility the project will need to move from an attractive concept to a completed and economically viable development.