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.