Downtown Minneapolis Office Market
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- Wells Fargo Center
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Re: Downtown Minneapolis Office Market
If they're seeking public financing they're still held to providing affordable units, and I imagine many conversion projects don't make financial sense without some kind of grant or TIF arrangement.
And I don't think anyone thinks these changes will be the floodgate moment by any means. But getting them done now versus waiting until the interest rates fall (as they're likely to do over the next two years) means that once the financing is available, the projects where the conditions make sense for conversion can move quickly and not risk those conditions changing while going through the current process.
And I don't think anyone thinks these changes will be the floodgate moment by any means. But getting them done now versus waiting until the interest rates fall (as they're likely to do over the next two years) means that once the financing is available, the projects where the conditions make sense for conversion can move quickly and not risk those conditions changing while going through the current process.
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- is great.
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Re: Downtown Minneapolis Office Market
Also, if one believes that Class C office space is most likely to get converted, these will tend to be in smaller, older buildings where amenities and premier unit layouts will be more difficult to shoe-horn in. So even if they're market rate, they'll probably be on the lower end of market rate.
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- IDS Center
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Re: Downtown Minneapolis Office Market
Lumber Exchange could get a redevelopment that also includes some residential.
https://www.bizjournals.com/twincities/ ... hange.html
https://www.bizjournals.com/twincities/ ... hange.html
Re: Downtown Minneapolis Office Market
Does anyone know what the final layout of the work they are doing on Hennepin for the new bike lanes will look like? They are doing work from 394 to 12th street but I can't seem to find the concept layout anywhere
Re: Downtown Minneapolis Office Market
You’ll find resources on the Minneapolis project page for Hennepin Dunwoody Bikeway and Multi-Use Trail:COLSLAW5 wrote:Does anyone know what the final layout of the work they are doing on Hennepin for the new bike lanes will look like? They are doing work from 394 to 12th street but I can't seem to find the concept layout anywhere
https://www.minneapolismn.gov/governmen ... y-bikeway/
I think it looks great.
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- Moderator
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Re: Downtown Minneapolis Office Market
Hold onto your wallets, Minneapolis taxpayers.
These buildings crossed my mind recently, as I thought they might have a chance to be the first substantial office buildings downtown to get torn down and replaced with something else. But at that tiny purchase price, I'm guessing the new owners will be able to make some investments and get enough leases signed to stabilize the balance sheet.
It's funny that Ruth's Chris Steakhouse signed a new 5-year lease in this godawful location. They must have ads in every room in the Hilton or something.
https://www.bizjournals.com/twincities/ ... -core.htmlThe 634,000-square-foot Forum buildings, previously known as International Centre and Oracle Centre, sold last week for $6.5 million, according to a real estate filing with the Minnesota Department of Revenue published Monday afternoon.
The price is about 91% lower than the property's last sale, at $73.7 million in 2019.
These buildings crossed my mind recently, as I thought they might have a chance to be the first substantial office buildings downtown to get torn down and replaced with something else. But at that tiny purchase price, I'm guessing the new owners will be able to make some investments and get enough leases signed to stabilize the balance sheet.
It's funny that Ruth's Chris Steakhouse signed a new 5-year lease in this godawful location. They must have ads in every room in the Hilton or something.
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- is great.
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Re: Downtown Minneapolis Office Market
These really are the worst buildings downtown, aren't they? While the devaluation clearly isn't great for property taxes, I don't think you can really draw much of a trendline off of this particularly bad asset.
It will be interesting to see if this very low purchase price allows them to offer bargain basement lease rates, and maybe lure in some back-of-house type employers that otherwise wouldn't consider downtown.
I'm not sure this is a tear-down price. Sherman paid $6.4m for the full block Wells Fargo operations center in arguably a better location.
It will be interesting to see if this very low purchase price allows them to offer bargain basement lease rates, and maybe lure in some back-of-house type employers that otherwise wouldn't consider downtown.
I'm not sure this is a tear-down price. Sherman paid $6.4m for the full block Wells Fargo operations center in arguably a better location.
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- Wells Fargo Center
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Re: Downtown Minneapolis Office Market
There's no world where they can convert these buildings back into Class A office product, right? It would be disappointing if newer, better proposed offices weren't able to sign tenants because something like this lured them away.
But as it stands, offering much lower lease rates to the sorts of tenants okay with Class B/C product would only be a positive.
But as it stands, offering much lower lease rates to the sorts of tenants okay with Class B/C product would only be a positive.
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- IDS Center
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Re: Downtown Minneapolis Office Market
Would the unique floor plates lend themselves to residential conversion?
Q. What, what? A. In da butt.
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- Wells Fargo Center
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Re: Downtown Minneapolis Office Market
The buildings look cosmetically similar to the office building that was converted into Minnetonka's Cloud9 Sky Flat Condos building.
But if I'm remembering correctly, that was a very weird, lightning-strike of a project that very few people would attempt to do in this market.
But if I'm remembering correctly, that was a very weird, lightning-strike of a project that very few people would attempt to do in this market.
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- Nicollet Mall
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Re: Downtown Minneapolis Office Market
I doubt these buildings could pivot and become class A or trophy space. I don't think this is like a La Salle plaza where office investment makes sense. These should be converted to housing or demolished and rebuilt completely.BikesOnFilm wrote: September 18th, 2024, 12:08 pm There's no world where they can convert these buildings back into Class A office product, right? It would be disappointing if newer, better proposed offices weren't able to sign tenants because something like this lured them away.
But as it stands, offering much lower lease rates to the sorts of tenants okay with Class B/C product would only be a positive.
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- Rice Park
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Re: Downtown Minneapolis Office Market
Careful with that demolition talk. I doubt if these buildings are demolished, anything will be put on that lot any time soon.minntransplant wrote: September 18th, 2024, 2:31 pmI doubt these buildings could pivot and become class A or trophy space. I don't think this is like a La Salle plaza where office investment makes sense. These should be converted to housing or demolished and rebuilt completely.BikesOnFilm wrote: September 18th, 2024, 12:08 pm There's no world where they can convert these buildings back into Class A office product, right? It would be disappointing if newer, better proposed offices weren't able to sign tenants because something like this lured them away.
But as it stands, offering much lower lease rates to the sorts of tenants okay with Class B/C product would only be a positive.
Conversion is probably the best bet these buildings have. Otherwise, at this sale price, they could be dirt cheap class B/C offices.
I think at such a low price, the buyer is probably thinking conversion or some other major projects, but a teardown is certainly possible. Fingers crossed that we don't get a new surface lot after years of positive progress getting rid of them.
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Re: Downtown Minneapolis Office Market
The cost for demolition for these buildings is going to be a much bigger number than people anticipate. In this market, I just really can't imagine somebody purchasing with the intent to demolish.
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- Wells Fargo Center
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Re: Downtown Minneapolis Office Market
Also you've got a 45% leased property with underground parking, and if your intent was to demolish with no redevelopment plan in place, the best hope you'd have to monetize your investment would be surface parking revenue? It feels more like someone picked up an amazing deal that they'll be able to flip in a few years for pure profit without even having to try that hard.MNdible wrote: The cost for demolition for these buildings is going to be a much bigger number than people anticipate. In this market, I just really can't imagine somebody purchasing with the intent to demolish.
Re: Downtown Minneapolis Office Market
I worked at the Hyatt 20 years ago and the Ruth”s Chris manager called every morning to ask what our occupancy was. Convention center obviously was bigger back then. But they seemed to survive the expensive chain steak house purge from downtown haha. This was when Manny’s and Oceanaire were in the Hyatt.twincitizen wrote: September 17th, 2024, 2:22 pm Hold onto your wallets, Minneapolis taxpayers.https://www.bizjournals.com/twincities/ ... -core.htmlThe 634,000-square-foot Forum buildings, previously known as International Centre and Oracle Centre, sold last week for $6.5 million, according to a real estate filing with the Minnesota Department of Revenue published Monday afternoon.
The price is about 91% lower than the property's last sale, at $73.7 million in 2019.
These buildings crossed my mind recently, as I thought they might have a chance to be the first substantial office buildings downtown to get torn down and replaced with something else. But at that tiny purchase price, I'm guessing the new owners will be able to make some investments and get enough leases signed to stabilize the balance sheet.
It's funny that Ruth's Chris Steakhouse signed a new 5-year lease in this godawful location. They must have ads in every room in the Hilton or something.
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- Moderator
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Re: Downtown Minneapolis Office Market
Wells Fargo Center, which previously sold in April 2019 for $313.6 million, reportedly sold for just $85 million. It was recently valued at $173 million for tax assessment purposes, and was expected to sell for something closer to $110-120 million. Not great news for Minneapolis taxpayers.
Strib: https://www.startribune.com/wells-fargo ... /601194455
Strib: https://www.startribune.com/wells-fargo ... /601194455
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- Wells Fargo Center
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- Joined: February 20th, 2015, 12:38 pm
Re: Downtown Minneapolis Office Market
But probably good news for the long term health of downtown that they'll be able to lower leases from 2019 highs. Hard to put anything experimental or interesting downtown if all the available space is locked up at a price that reflects a completely different reality.
It would take exceptionally poor new owners to not take a trophy asset, already 60% leased, and somehow not fill it up the rest of the way with lower leases and capital to improve amenities.
It would take exceptionally poor new owners to not take a trophy asset, already 60% leased, and somehow not fill it up the rest of the way with lower leases and capital to improve amenities.
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- Nicollet Mall
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Re: Downtown Minneapolis Office Market
I've always wondred if the Wells Fargo Tower might be a candidate for residential conversion, at least in part of the building. The Art Deco setbacks create interesting angles and somewhat smaller floor plates on the upper floors and sides of the building. I remember visiting a law office about 25 years ago which had a two-level lobby with a grand staircase on the 40- somthing floor. You could see east/ west through the windows because the floor plate was long and relatively narrow. Perhaps, even with an $85 million sales price residential conversion would still be unworkable?
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- Wells Fargo Center
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Re: Downtown Minneapolis Office Market
I had a conversation with some commercial real estate folks about conversions. The price per square foot needs to be absolutely decimated on a commercial property before they'll think about something like this.
Being a post-1950s office tower already moves Wells Fargo Tower far down the list of attractive conversion candidates from a floor plan consideration alone. Considering that the building is 60% leased and is one of the city's Class A trophy office properties makes it a nonstarter. And if we had reached the point where this building had deteriorated down to Class B/C and was unable to attract tenants, sadly I think the owners would be more inclined to tear it down than convert. It would be way cheaper to deal with that.
Thankfully, we're not in that scenario. The cheaper financing with new owners will help them fill the rest of the building up and breathe some additional oxygen into Downtown. Long term, the price will recover and the new owners will be heralded for their foresight, even though it's pretty obvious even now that the big three towers have a lot of room to recover once the dead weight of their pre-pandemic financing is off their backs.
Being a post-1950s office tower already moves Wells Fargo Tower far down the list of attractive conversion candidates from a floor plan consideration alone. Considering that the building is 60% leased and is one of the city's Class A trophy office properties makes it a nonstarter. And if we had reached the point where this building had deteriorated down to Class B/C and was unable to attract tenants, sadly I think the owners would be more inclined to tear it down than convert. It would be way cheaper to deal with that.
Thankfully, we're not in that scenario. The cheaper financing with new owners will help them fill the rest of the building up and breathe some additional oxygen into Downtown. Long term, the price will recover and the new owners will be heralded for their foresight, even though it's pretty obvious even now that the big three towers have a lot of room to recover once the dead weight of their pre-pandemic financing is off their backs.