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.

For more market data on Minneapolis, please click here.

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.

For more market data on Minneapolis, please click here.

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.

For more market data on Minneapolis, please click here.

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.

For more market data on Minneapolis, please click here.

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.

For more market data on Minneapolis, please click here.

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.

For more market data on Minneapolis, please click here.

Opus Breaks Ground on Second Downtown Minneapolis Luxury Apartment Complex

By Gabriel Circiog, Associate Editor

Opus Development Corp. recently announced plans to begin development and construction of a new boutique luxury residential apartment complex in downtown Minneapolis. The project, dubbed VÉLO, French for “bicycle,” will be owned by Twin Cities-based real estate investment company Sentinel Management Co. 

Located at 103 N. Second St. In the North Loop neighborhood, VÉLO will feature 101 luxury units and 12,000 square feet of retail space on the first level. The residential complex is closely located near Minneapolis’ well-known bike path system and offers access to various amenities including an outdoor plaza, club lounge, yoga studio, fitness centers and rooftop terrace, complete with resident garden boxes.

“We’re excited to offer a unique living experience for those seeking a luxury and lifestyle-rich rental option in the thriving North Loop neighborhood,” said Tom Lund, vice president of real estate development for Opus. “VÉLO will be the ultimate hub for residents seeking a balanced lifestyle in the heart of America’s premier bike city.”

The project is scheduled to break ground in April 2013 and is expected to be completed and ready for occupancy in spring 2014. Observed Luigi Bernardi, president of Sentinel Management Co. and Aurora Investments L.L.C.: “We are looking forward to working with Opus on developing this unique and exciting property in the heart of Minneapolis.”

The developer of the project is Opus Development Corp., while Opus Design-Build L.L.C. will construct the building. Opus AE Group Inc. and Elness Swenson Graham Architects Inc. will collaborate on the design.

As previously reported by Commercial Property Executive, Opus Development Corp. is also currently developing The Nic on Fifth, a 26-story luxury apartment building in downtown Minneapolis, slated for completion at the beginning of summer 2014.

For more market data on Minneapolis, please click here.

Rendering Credits to: Opus AE Group Inc. and Elness Swenson Graham Architects Inc. via www.minneapolisloftscondos.co

HealthPartners Opens $36M Mental Health Building at Regions Hospital

By Gabriel Circiog, Associate Editor

HealthPartners recently announced the opening of a new mental health building at Regions Hospital. The new eight-story facility will replace the existing inpatient facility on its St. Paul campus.

“Regions Hospital is a place of hope and healing, and we continue to make investments that reflect the needs of the community,” said Brock Nelson, president & CEO of the hospital. “This project is more than a building. It’s about providing our patients and their families care in an environment that is equal to the level of care we provide for other illnesses.”

The new $36 million building is specifically designed to care for patients with mental illnesses and features 100 private rooms, with the possibility to add 20 more, close to double the size of the previous space. The construction process lasted 18 months and factored in the input of former patients and family members in the design and the way care is provided. The facility is the largest private investment in mental health in state history.

“The care we provide will play an important part in our patients’ road to recovery, but we know it is just one part of the journey,” said Mary Brainerd, president & CEO of HealthPartners. “Together with the HealthPartners Clinics and community-based resources, we can provide patients with the right level of care throughout their treatment.”

In other healthcare real estate news, Sabra Health Care REIT Inc. acquired an 87-bed skilled nursing facility in Minneapolis known as Camden Care Center for $7.2 million. At the same time, Sabra Health Care signed a 15-year triple-net lease with Trinity Health Systems L.L.C. for the property. The initial yield on cash rent is expected to be 10 percent, with $0.9 million in annual lease revenues.

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.regionshospital.com

LCS Enters into JV with Nine Senior Living Communities

By Gabriel Circiog, Associate Editor

Des Moines, Iowa-based LCS has entered into a joint venture with Chicago-based real estate investment firm Harrison Street Real Estate Capital that has acquired an equity position in nine senior living communities in Greater Minneapolis.

The market-rate rental communities feature a total of 1,116 residential units. Through CRSA, an LCS company, LCS will provide a wide range of management and marketing services to the communities. Out of the nine communities, seven offer assisted living care and one provides memory care services.

“LCS and CRSA are pleased to have the opportunity to offer our hospitality, management and marketing expertise to this impressive collection of senior residences,” says Steve Nornes, director of operations management for CRSA. “Each community will receive customized support based upon our 41-year experience in the management and development of senior living communities.”

The nine communities on which LCS and Harrison Street have partnered include Earle Brown Terrace–Brooklyn Center; Heathers Estates–Crystal; Heathers Manor–Crystal; Meridian Manor–Wayzata; The Rivers–Burnsville; The Timbers–Apple Valley; Tradition–Brooklyn Park; Waterford Estates–Brooklyn Park; and Waterford Manor–Brooklyn Park.

Founded in 1971, LCS has had a presence in the Twin Cities area since 1978. Currently the company is developing Trillium Woods, a continuing-care retirement community in Plymouth, Minn. The new developments will be managed by Life Care Services, an LCS company that specializes in the management and marketing of CCRCs. Overall, LCS companies currently provide services to more than 30,000 residents in 31 states and the District of Columbia.

For more market data on Minneapolis, please click here.

Opus Closes on Financing, Prepares to Break Ground on Luxury High-Rise Apartment Building

By Gabriel Circiog, Associate Editor

Opus Development Corp. recently announced it has closed on financing for a planned luxury high-rise apartment building, The Nic on Fifth. The name of the development reflects the location of the project on Nicollet Mall and Fifth Street in downtown Minneapolis. The financing was provided by SunTrust Bank, and construction is expected to break ground by the end of November.

“With the financing secured, Opus is thrilled to begin work on The Nic on Fifth. Minneapolis is definitely a top-tier city for both equity investors and lenders,” said Dave Menke, senior vice president & general manager.

As previously reported on this page, the project is adjacent to another Opus project, the new Xcel Energy building. The two properties aim to transform the north end of Nicollet Mall.

Opus is joint venturing with private real estate investment firm Founders Properties L.L.C. According to Founders senior vice president Wade Lau: “This is a major investment in Downtown, and we are extremely pleased to be involved in a project that is so instrumental in transforming our central business district.”

The Nic on Fifth is set to become the first new high-rise residential building in downtown Minneapolis in close to 30 years. The 26-story luxury apartment building will feature 253 units, 26 of them penthouses. The building will also be the first high-rise apartment project designed to achieve LEED certification. The construction will feature high-end finishes and amenities including 24/7 concierge service, an outdoor roof terrace with pool and spa, a yoga studio, a fitness center, an outdoor fire pit, guest suites and a dog play area. The first residents are expected to move in at the beginning of summer 2014.

“The Nic on Fifth will bring a new level of luxury apartment living to downtown Minneapolis and establish a new benchmark for those seeking high-end luxury high-rise living. The combination of extensive amenities, a light-rail station, skyway connectivity, restaurants and retail will be very attractive to residents looking for luxury high-rise living,” said Tom Lund, Opus’ vice president of real estate development.

The building will be constructed by Opus Design Build L.L.C., while Opus AE Group Inc. and Elness Swenson Graham Architects Inc. will collaborate on the design.

For more market data on Minneapolis, please click here.

Rendering courtesy of www.ci.minneapolis.mn.us

Shorenstein Properties Acquires Minneapolis City Center for $202.5M

By Gabriel Circiog, Associate Editor

Shorenstein Properties has closed on the acquisition of Minneapolis City Center, a 50-story mixed-use complex located in the heart of downtown Minneapolis. Shorenstein made the purchase on behalf of Shorenstein Realty Investors Ten L.P., a commingled fund formed in 2010 and with $1.2 billion of committed capital.

Located at 33 S. Sixth St., the complex occupies an entire city block bounded by Nicollet Mall, Hennepin Avenue and Sixth and Seventh Streets. The 1.6 million-square-foot complex features a 50-story tower with 1.1 million square feet of Class A office space on top of a 489,000-square-foot, four-level retail podium. The anchor tenant is Target Corp., occupying 72 percent of the office space under a lease that expires in December 2023. Overall, the property is 95 percent leased. The transaction also included a 687-stall, three-story parking structure and a ground lease encumbering the 583-room Minneapolis Marriott City Center Hotel adjacent to the complex.

Shorenstein Properties acquired Minneapolis City Center from Brookfield Office Properties Inc. for $202.5 million gross. Net proceeds to Brookfield were around $106 million. Eastdil Secured advised Brookfield on the sale.

Shorenstein Properties chairman & CEO Douglas Shorenstein said: “This property is in a superior office and retail location in a dynamic city. Minneapolis is growing faster than many larger metro areas, and it has wisely invested in its future success by developing the infrastructure necessary to attract more businesses and residents to downtown. We are pleased to have Target, which has done so much for Minneapolis, as our major tenant. We plan to work with our tenants and the community to add value to the city and to this important property by using our extensive expertise operating Class A office properties.”

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.brookfieldofficeproperties.com

Chambers Street Properties Acquires Industrial Building in Rogers

By Gabriel Circiog, Associate Editor

A New Jersey-based real estate investment trust, Chambers Street Properties, has acquired a warehouse/distribution building in the northwestern Minneapolis suburb of Rogers.

Located at 20000 S. Diamond Lake Road, the 280,577-square-foot facility was developed in 2004 and is currently fully leased on a triple-net basis. Situated on 15.2 acres of land, within an established industrial park, it benefits from regional highway access. The state-of-the-art building features 32-foot clear heights, 32-dock loading doors, parking for 215 vehicles and one drive-in door.

“This is an excellent asset, built to high standards in a quality location, and we are delighted to add it to our growing portfolio,” said Phil Kianka, executive vice president & COO for Chambers Street Properties. “The economic recovery in the Minneapolis market, the 10th largest industrial market in the country, continues to show improvement, and total employment is projected to increase over the next five years, making this a desirable asset for Chambers Street Properties.”

The 20000 S. Diamond Lake Road building is not the first property acquired by Chambers Street Properties in the submarket, the trust having acquired a 335,000-square-foot distribution facility at 13201 Wilfred Lane in Diamond Lake Park in June 2009.

According to the Hennepin County property tax records list, quoted by the Minneapolis / St. Paul Business Journal, the previous owner was Minneapolis-based Geneva Arcx. Details of the transaction were not disclosed, and the most recent recorded sale for the property was in February 2005 for $13.4 million.

Chambers Street Properties, formerly CB Richard Ellis Realty Trust, invests in real estate and focuses on office and industrial properties located across the major metropolitan areas of the United States and internationally.

For more market data on Minneapolis, please click here.

Logo Courtesy of: www.chambersstreetproperties.com

Chesapeake Lodging Trust Acquires 222-Room The Hotel Minneapolis

By Gabriel Circiog, Associate Editor

Chesapeake Lodging Trust has recently acquired The Hotel Minneapolis, a 222-room Marriott Autograph Collection hotel, for $46 million, or approximately $207,000 per key. The self-advised lodging real estate investment trust funded the acquisition with a borrowing under its revolving credit facility.

James L. Francis, the Trust’s President and Chief Executive Officer, stated, “We are thrilled to expand our portfolio with another high-quality, full-service boutique lifestyle property located in the core CBD of Minneapolis. The property has been meticulously restored and is one of the premier hotels in the city.”

Located at 215 Fourth Street South, The Hotel Minneapolis is connected to the city skywalk system which unites more than 80 block and over 26 million square feet of office and retail buildings across downtown Minneapolis. The 10-story hotel feature 22 suites, 6,000 square feet of meeting and catering space, the 250-seat Max Restaurant and Bar, a business center, a fitness center and around 12,000 square feet of leased tenant space. James L. Francis added: “While we don’t value the tenant cash flow separately from the hotel’s operations, these spaces enhance the cash flow of the property by over 10%.”

The Hotel Minneapolis, through a restoration program, has retained original details and features of the historic 1906 Midland Bank building in its lobby and ground floor. Talking about the modern design of the hotel, James L. Francis said: “The overall attention to the smallest of details is remarkable; this is truly a special property and excellent addition to our portfolio.” Original bank vaults have been incorporated throughout the building, including the original bank cashier vault, Audrey’s Vault, which now serves as the centerpiece of the hotel’s social catering space and the hotel’s wine cellar.

Chesapeake Lodging Trust has entered an agreement with a subsidiary of HEI Hotels and Resorts, the hotel’s current operator, to manage the property and to continue its affiliation with Marriott under the Autograph Collection.

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.thehotelminneapolis.com

Hyatt Acquires Downtown Minneapolis Hotel

By Gabriel Circiog, Associate Editor

The Hyatt Hotels Corp. recently announced that a Hyatt affiliate acquired a select-service hotel, the 213-room Comfort Suites in downtown Minneapolis. Following $20 million in capital improvements, the hotel will be rebranded as Hyatt Place Minneapolis Downtown.

Upon completion of the improvements, an affiliate of Summit Hotel Properties Inc. plans to buy the hotel from the Hyatt affiliate, which will continue to manage the property. The rebranding and ownership change is scheduled for the summer of 2013.

Stephen Haggerty, Hyatt’s global head of real estate and capital strategy, said: “Recycling capital to allow continued strategic growth is core to our business approach, and this transaction is the perfect example of how we are executing that in an effort to help Hyatt as well as owners achieve that growth. Summit was one of the first companies to recognize the potential of the Hyatt Place brand, and we are excited to have identified new opportunities for us to grow the brand and our relationship with such a valued company.”

Located at 425 S. Seventh St., the Hyatt Place Minneapolis Downtown offers easy access to the city sports stadiums, including the venues for the Minnesota Timberwolves, Minnesota Twins and Minnesota Vikings. The property is also close to the city’s historic Hennepin Theater District, as well as various dining and shopping venues.

Hyatt Place Minneapolis Downtown will be the fourth Hyatt-branded hotel in the Minneapolis area, and Dan Hansen, president & CEO of Summit Hotel Properties, said: “Hyatt has invested an impressive amount of its own capital in the Hyatt Place brand, which gives Hyatt a level of credibility with owners not typical in the industry. That commitment demonstrated that Hyatt understands how Summit approaches our business, which has been a key factor in driving new ways to deepen our relationship.”

For more market data on Minneapolis, please click here.

Photo Courtesy of: www.comfortsuites.com

Valspar Announces $30M Campus Renovation, Expansion; St. Paul Reopens Ballpark Builder Selection Process

By Gabriel Circiog, Associate Editor

The Valspar Corp. announced plans to renovate its former headquarters building and expand its research-and-development campus in downtown Minneapolis. The campus is the anchor of the company’s research-and-development network worldwide, known as the Valspar Applied Science and Technology Centers (VAST). According to Dr. Cynthia Arnold, senior vice president & chief technology officer for Valspar: “The expanded campus will enable research and development at the highest level, as well as create the right environment for customer and supplier collaboration for new coatings technologies.”

The company, one of the largest global coatings manufacturers in the world and one of Minneapolis’ oldest global companies, dating all the way back to 1806, will invest $30 million in the project, which is expected to create as many as 135 full-time jobs over the next two years, including high-paying material science jobs. Gary Hendrickson, chairman & CEO of Valspar, said: “We will devote more resources toward developing differentiated coatings technologies to address the changing needs of our customers. Our scientists and researchers will have access to a best-in-class facility to more quickly and efficiently bring these solutions to market.”

In other local real estate news, The Minneapolis / St. Paul Business Journal reports the city of St. Paul has reopened the selection process for the new $54 million St. Paul Saint’s ballpark. The announcement comes after a series of questions from the news media and a lawsuit filed by the Taxpayer League of Minnesota, questioning why the selection process didn’t incorporate a competitive bidding. The city initially announced that the design-build services for the project, planned for the Lowertown area of St. Paul, would be awarded to Ryan Cos. US Inc. The Minneapolis-based company has already carried out pre-design work on the project for the city and declared its disappointment in the redefining of the selection process at such a late stage. The new selection process, which is expected to last 120 days, will create certain delays, but Mike Hahm, St. Paul’s Parks and Recreation director, is confident the park will be ready by opening day in May 2015.

Photo Courtesy of: www.valspar-asia.com

AFL-CIO HIT Invests $15.7M in M-U Construction Uptown

By Gabriel Circiog, Associate Editor

The AFL-CIO Housing Investment Trust has invested $15.7 million in the construction of the City Walk Apartments, a mixed-use development in Minneapolis’ Uptown community.

The HIT investment of union pension funds will help construct a six-story building featuring 92 housing units, underground parking, retail and restaurant space, and a new public pedestrian plaza.

Located in the heart of Uptown, a high-density commercial and residential district that has seen significant development in the past few years, the City Walk Apartments will be situated close to another HIT-financed development that was completed in 2009: the $13 million Solhem apartments.

Dan McConnell, business manager for the Minneapolis Building and Construction Trades Council, said: “The HIT is keeping our members busy with another investment in union-built housing in Minneapolis. That means another quality apartment project for the city and family-supporting jobs for our members.”

During the past 10 years, the HIT has invested more than $380 million in the Minneapolis-St. Paul metropolitan area. With more than 4,000 units of housing built or preserved in 31 projects, it has generated more than 3,600 jobs for members of the local building and construction trade unions. The project’s mortgage banker is Oak Grove Commercial Mortgage L.L.C.

The investment is part of the HIT’s national Construction Jobs Initiative, a program that aims to create 15,000 union construction jobs over a three-year period. To date, investments by HIT and its subsidiary Building America CDE have leveraged more than $2.5 billion worth of development on 49 projects in 27 cities, generating more than 14,000 union construction jobs.

Charts courtesy of: Marcus & Millichap.

Polaris Industries Breaks Ground on Expansion of Product Development Center

By Gabriel Circiog, Associate Editor

Polaris Industries Inc. recently broke ground on an expansion of a product development center near Wyoming, Minn.

Various Polaris executives, politicians and civic leaders attended the groundbreaking ceremony, including U.S. Sen. Amy Klobuchar, U.S. Congressman Chip Cravaack and Commissioner Mark Phillips of the Minnesota Department of Employment and Economic Development (DEED). “This investment is an important boost to the local economy and will help maintain Polaris’ place as an industry leader and innovator,” said DEED Commissioner Phillips.

The StarTribune reports the Polaris Industries is set to spend $20 million to build the 144,000-square-foot addition to its existing facility, located on 620 acres of land around 30 miles north of Minneapolis. The contractor, Ryan Cos., will start construction next week, and the project is expected to be finalized by August of next year.

Polaris first opened the product development center in 2005, with the help of the state’s JOBZ tax incentive program, Ryan Cos. having led construction of the original building. “We were excited when Polaris chose Ryan to construct its product development center in 2005, and we’re feeling that excitement again as we partner with Polaris to expand the facility,” said Pat Ryan, president & CEO of Ryan Cos. US Inc.

Polaris is expecting to transfer around 100 employees into the new space and ultimately plans to add another 300 workers to the facility over the next three years. Greater MSP, the region’s economic development partnership, coordinated the effort to compile a package of financial incentives to help Polaris expand. A mix of R&D credits, JOBZ financing, job training support, infrastructure improvements and other incentives were drawn up in collaboration with Chisago County, the city of Wyoming and DEED to support Polaris’ project.

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Image Courtesy of: www.ryancompanies.com