If you could consolidate the block on both sides of the alley, this could be an opportunity to take a risk that could become an interesting template for redevelopment of 16 Ave N.
I don't think 16 Ave N is ever going to be pedestrian friendly. Not with the level of traffic, surface parking lots, pawn shops, gas stations, mechanics, standalone restaurants, and drive throughs. What if instead, we focus on moving CRUs to the south side of 17 Ave N and the alley between 16 Ave & 17 Ave N?
I think you'd still have to have CRUs on the 16 Ave side of the building, because it'd be tough to sell those ground floor units as residential with the traffic noise, and the alley would require a lot of work, since so many buildings have surface parking off the alley, and the overhead powerlines would need to be buried, but the pedestrian focus could be pushed away from 16 Ave N.