Ryan Cos. Unveils Plans to Build $400M M-U Development Next to Planned Vikings Stadium

By Gabriel Circiog, Associate Editor

Twin Cities developer Ryan Cos. recently unveiled plans to build a $400 million mixed-use development adjacent to the planned new Vikings stadium in downtown Minneapolis.

Twincities.com reports Ryan Cos. has reached an agreement to buy five square blocks in downtown Minneapolis from the Star Tribune newspaper after five months of negotiations. Located near the offices of the newspaper, the land will be used for a $400 million mixed-use commercial-and-residential complex and public park. The newspaper intends to move its headquarters.

The project aims to be a catalyst for continued redevelopment in the Downtown East neighborhood, similar to how Ryan Cos.’ Midtown Exchange project in the former Sears store on Lake Street revitalized the Phillips neighborhood, or its three-block Nicollet Mall development gave new life to that end of the Mall.

The project will feature 1 million square feet of office space in two 20-story office buildings, 40,000 square feet of retail space at the street and skyway levels, and more than 300 residential units. The office space is planned to have a capacity to accommodate between 5,000 and 6,000 employees.

City council president Barb Johnson said: “This is a very exciting project for our city. When we were pushing for the new stadium to be built on the site of the Metrodome, this is the kind of development that we expected would come, to continue the transformation of this area.”

“When we first talked about getting the Vikings Stadium downtown, we shared a vision for how the stadium could spur development in the area and eventually fill in the only part of downtown that’s truly underutilized. Now, just over a year after the stadium bill was signed — before ground is even broken on the stadium — we have a proposal that brings that vision to life,” said Mayor R.T. Rybak.

The city will only finance the green space and the parking ramp, with a total cost of around $65 million, through city-issued bonds. The revenue generated by the 1,328-stall parking ramp will go toward paying down the bonds. Ryan Cos. estimates the project will be completed in summer 2016.

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Rendering Courtesy of: www.ryancompanies.com

Mortenson Continues Downtown Minneapolis Development Plans with New 220-Room Hotel Project

By Gabriel Circiog, Associate Editor

Mortenson Development is planning a nine-story, 220-room hotel near the First Avenue nightclub in downtown Minneapolis.

The Minneapolis / St. Paul Business Journal reports that the development company has a deal to buy the site at the corner of First Avenue North and Eighth Street North. The site became available after Turnstone Group, which owned it, suspended plans for a nine-story building due to increased construction costs.

Bob Solfelt, vice president of Mortenson Development, told the business journal it is still too early to identify a hotel operator, although a limited-service one is most likely to be chosen. Although Mortenson has yet to submit plans to the city, the company is aiming to open the hotel by the time the Minnesota Twins host the MLB All-Star Game at Target Field in July 2014.

The development firm also recently released the first rendering of a new 30-story luxury apartment tower in downtown Minneapolis. Designed by Minneapolis-based Urbanworks Architecture, the project dubbed as 4Marq could feature a seven-story pedestal and an indoor parking garage. The garage roof could be partially covered by a patio; the remainder of the building is glass with a white external skeleton. Mortenson had planned to submit the formal development application for the 262-unit building to the city by the end of March, but the plans were delayed for a few weeks.

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Logo Courtesy of: www.mortenson.com

Rendering Courtesy of: Urbanworks Architecture via www.ci.minneapolis.mn.us

Chartres Lodging Acquires $28M Hotel, Paves Way for Second Radisson Blu Hotel in Twin Cities

By Gabriel Circiog, Associate Editor

The second Radisson Blu in the Twin Cities will soon open, after San Francisco-based Chartres Lodging Group closed on the $28 million acquisition of the Radisson Plaza Hotel Minneapolis, paving the way for the downtown hotel’s conversion.

The Minneapolis / St. Paul Business Journal reports the California investment group is expected to spend between $25 million and $30 million to convert the hotel to a Radisson Blu. Minnetonka-based Carlson Rezidor Hotel Group signed a long-term contract with Chartres Lodging Group to manage the hotel.

Renovation of the Radisson Blu is set to start in the next few months, and completion is expected in 2014. The preliminary plans include upgrades to the guest rooms and suites, as well as the common areas, and an increase in conference and ballroom space. The FireLake Grill House and Cocktail Bar, the existing on-site restaurant, is also set to be updated. Furthermore, finishing touches, lighting and new signage will be arranged for the street-level entrance.

Following inauguration of the 500-room Radisson Blu Mall of America on March 15, this second Twin Cities Radisson Blu will join about 230 other Radisson Blu hotels around the world and 51 other projects under development.

Chartres Lodging Group focuses on finding value in under-performing, well-located, full-service lodging, conference center and resort assets. After completing turnaround renovations and repositionings, the assets are considered for sale or recapitalization to institutional-quality investors, according to the company’s official Web site.

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Photo Courtesy of: www.radisson.com

HFF Secures Financing for 194-Unit Student Housing Project

By Gabriel Circiog, Associate Editor

Holliday Fenoglio Fowler L.P. recently announced it has arranged construction financing along with joint venture equity for the development of Metro Park East, a 194-unit student housing project at the University of Minnesota – Twin Cities in Minneapolis.

A $29.5 million construction loan through American Bank of Texas was secured on behalf of the developer, Fountain Residential Partners L.L.C. by HFF’s Adam Herrin. HFF also assisted in securing $11.6 million in joint venture equity with an institutional capital partner.

Located at 2635 SE Fourth St. in the Stadium Village neighborhood, the 551-bed Metro Park East is directly adjacent to the East Bank campus of the university. The project, which will be built to LEED Silver standards, will feature one-, two-, three- and four-bedroom apartment homes and is scheduled for completion and occupancy in the fall semester of 2014. The development will include a clubhouse featuring a bar-styled game room, a state-of-the-art fitness center and a cyber café with study rooms.

Signs are encouraging for the Twin Cities market overall. With more than 75,000 jobs generated since 2010 and another 49,300 new jobs expected this year, the Minneapolis-St. Paul market has seen a pent-up renter demand that is driving vacancies to low levels, according to a recent report released by Marcus & Millichap. Apartment availability is expected to get a boost in 2013, as developers will complete close to 2,800 rental units, of which more than 2,000 are slated for Minneapolis. According to the report, apartment operators are expected to face a stiff competition due to the spike in supply and increased home sales, including the first condo project to start since the beginning of the recession.

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Chart Courtesy of: Marcus & Millichap

Campbell Mithun Considers Move from Namesake Tower

By Gabriel Circiog, Associate Editor

After residing at the Campbell Mithun Tower in Minneapolis since 1985, Campbell Mithun could be moving out: The advertising agency has been looking at various real estate options in downtown Minneapolis.

The Minneapolis / St. Paul Business Journal reports Campbell Mithun’s lease at 222 S. Ninth St. expires at the end of 2014, and the agency is analyzing its options. The company is being assisted in its site search by James Damiani, a broker at Colliers International in Minnetonka, while Julie Snow Architects is evaluating its space and design options.

Campbell Mithun moved into the 41-story tower as soon as it was built and currently leases around 130,000 square feet in the upper middle floors of the tower, which now bears its name. The company is searching for around 75,000 to 80,000 square feet, the same amount of space it currently occupies at its headquarters. The balance is either sublet or available to sublease.

In other real estate news, the same Minneapolis / St. Paul Business Journal reports Rick Born has signed a contract to buy, for a second time, the Boatworks building in Wayzata. After acquiring the building for $6 million from investor Irwin Jacobs in 1996 for his old company, Born Information Services, he sold it in 2001. Now, he plans to move his growing technology company, RBA Consulting, to the 68,000-square-foot Boatworks building. RBA will be leasing around 35,000 square feet in the Boatworks building, consolidating two 12,000-square-foot offices currently located in Wayzata and Minneapolis’ North Loop district.

Photo Courtesy of: www.campbellmithuntower.com

FedEx Plans New $20M Facility in Maple Grove; Life Time Fitness Extends Lease at Target Center

By Gabriel Circiog, Associate Editor

FedEx is planning to build a new $20 million sorting and distribution center in Maple Grove. The new 276,400-square-foot facility is expected to open in 2014 and will replace the smaller facility FedEx leases in Brooklyn Park for its SmartPost business, The Minneapolis / St. Paul Business Journal reports.

FedEx SmartPost, a subsidiary of FedEx, has been growing in recent years and plans to expand its capacity by 80 percent in the next five years. Its current facility, the Crosstown building located at 7500 Setzler Parkway North, features 120,000 square feet of warehouse and distribution space.

Although FedEx has not announced yet how many jobs it will have at the new Maple Grove site, the company plans for 332 employee parking spaces. Located at 9997 85th Ave. North, the 42-acre site is close to Interstate 694 and Highway 81. Erin Truxal, a spokesperson for FedEx Ground said that the site was chosen due to its easy access to major highways, strong local workforce and proximity to customers’ distribution centers.

In other local news, the StarTribune reports Life Time Fitness has extended its lease at the Target Center and plans to invest millions of dollars in renovating the gym. Life Time Fitness has signed a 12-year extension on its lease, which was set to expire at the end of February. The agreement stipulates that the lease is automatically extended to 2028, as long as the Minnesota Timberwolves’ lease at the city-owned Target Center extends beyond 2025.

Photo Courtesy of: www.artisreit.com

KBS REIT III Acquires 40-Story RBC Plaza for $118.1M

By Gabriel Circiog, Associate Editor

KBS Real Estate Investment Trust III recently announced the acquisition of the 678,045-square-foot RBC Plaza. The Newport Beach, Calif.-based public non-traded REIT purchased the downtown Minneapolis mixed-use office building for $118.1 million (net of closing credits).

Located in Minneapolis’ financial district along Nicollet Mall at 60 South Sixth St., the 40-story RBC Plaza features 609,368 square feet of office space and 68,677 square feet of retail and amenity space on top of an underground parking structure. The retail component of the building is located on the first four floors of RBC Plaza and is connected via skywalk to a multi-building retail complex spanning two city blocks.

The seller, Brookfield Office Properties, was represented by Tom O’Brian and Terry Kingston with Cushman & Wakefield/NorthMarq and Mike Winn and Tim Richey with Cushman & Wakefield/Denver. KBS has hired Cushman & Wakefield/NorthMarq to manage and lease the asset, effective Feb. 1, 2013. Sonja Dusil will lead the leasing efforts, and Theresa Elveru will lead the property management team.

Rodney Richerson, KBS regional president, said: “We believe we have a great opportunity to convert some of the upper-level retail floors into creative office space, along with creating a primary entrance off of Nicollet Mall and improving the overall retail mix. In addition to these improvements, we anticipate adding stronger office amenities, conference rooms, a fitness facility and some lobby renovations that will cost approximately $3 million.”

As previously reported by Multi-Housing News, another KBS-affiliated company recently acquired another property in the greater Minneapolis area: Watertower Apartments, a 228-unit mixed-use apartment community in Eden Prairie.

KBS Closes on Acquisition of 228-Unit Eden Prairie M-U Community

By Gabriel Circiog, Associate Editor

Newport Beach, Calif.-based KBS Legacy Partners Apartment REIT has closed on its first acquisition of 2013: Watertower Apartments. The 228-unit mixed-use community, located in Eden Prairie, Minn., is situated close to I-494 and Highway 212 and just 16 miles southwest of downtown Minneapolis. The non-traded real estate investment trust is sponsored by KBS Capital Advisors L.L.C. and Foster City, Calif.-based Legacy Partners Residential Realty L.L.C. KBS currently owns a total of 1,980 apartment units in Minnesota, Texas, North and South Carolina, Illinois and Maryland.

Watertower Apartments was 94 percent occupied at the time of the acquisition and offers 228,775 square feet of mixed-use space in two adjacent structures. The three-story building features 28 residential units and 10,065 square feet of ground-floor retail space, while the four-story building features 200 apartment units above a two-level underground parking garage.

“We are very pleased to add Watertower Apartments to the KBS Legacy Partners Apartment REIT portfolio,” said W. Dean Henry, the REIT’s CEO. “The property boasts location, amenity and design advantages that we believe rival anything in the greater Minneapolis market.”

In other local real estate news, the StarTribune reports the signature Kellogg Square apartment tower in downtown St. Paul has been sold by Sentinel Management for $51 million. Golden Valley-based Bigos Management bought the tower, increasing its Twin Cities apartment portfolio, which currently features more than 42 owned or managed apartment communities.

Located at 111 E. Kellogg Blvd., Kellogg Square, built in 1970, has 450 apartments and features commercial space and a parking structure with 594 stalls. Sentinel was represented in the deal by NAI Everest.

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Photo Courtesy of: www.watertowerapts.com

$78M Duluth Airport Terminal Opens for Passengers

By Camelia Bulea, Associate Editor

After more than four years in the works, a new passenger terminal at Duluth International Airport has opened. The new state-of-the-art facility cost $78 million to build and features lots of glass and natural light.

The terminal is characterized by a glass-fronted wall rising 40 feet, with a roof imitating the shape of a wave. The passenger concourse can accommodate more than three times the number of passengers the old waiting area could, allowing 400 passengers to board their flights, according to the Duluth News Tribune. “There’s a lot of volume, and it’s grand,” said Elizabeth Samsa of TKDA, the lead interior designer.

Samsa added that warm wood tones were used on wall panels and portions of the ceiling to balance the natural light. The new design was meant to create a warmer airport than the old one, which was built in 1973.

Next month, developers will start demolishing the old terminal, which sits behind the new one, in order to make way for more aircraft parking. The parking ramp project, which is expected to be completed in the fall of 2013, is part of the $78 million project cost.

The project was entirely financed with federal grants and state bonding money.

The designer, Reynolds, Smith & Hill, sought LEED Silver certification for the 110,000-square-foot terminal, which features sustainable green energy elements like geothermal heating, natural lighting and a highly efficient water system. The general contractor was Minneapolis-based Kraus-Anderson Construction Co.

Photo of the new terminal at Duluth International Airport: Bob King of the Duluth News Tribune, rking@duluthnews.com.

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Sears Plans Major Redevelopment Project at St. Paul Site

By Camelia Bulea, Associate Editor

Developers announced big plans for the site surrounding the St. Paul Sears store near the State Capitol. Sears’ redevelopment plans call for new retail, an office building and residential space.

According to Finance & Commerce, the redevelopment of the 14-acre site on Rice Street will include the following:

-          An additional 111,700 square feet of retail space in four separate buildings attached to the south side of the existing Sears building;

-          121 apartments and 18 townhomes in the northwest corner of the property;

-          A four-story, 112,000-square-foot office building;

-          A 586-space parking ramp.

The project will be built in three phases, with retail space built in the initial phase, followed by the office property and parking garage. The site, now home to 700 parking spaces, is located south of the Central Corridor Light Rail Transit line, which is considered to be a catalyst for new development in the area, Cecile Bedor, city planning and economic development director, told the Pioneer Press.

The plan will go before the state’s Capitol Area Architectural and Planning Board for design concept approval on Jan. 16, the Twin Cities publication reported.

In other interesting news, Nordstrom Inc. announced plans to open a full-line store at Ridgedale Center in Minnetonka. The new store will be approximately 138,000 square feet and is scheduled to open in fall 2015. This will be the second full-line store in the Twin Cities for the Seattle-based retailer.

Image rendering of the Sears redevelopment project courtesy of the city of St. Paul, via Pioneer Press.

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