Rentals continue to win out over condos in downtown Minneapolis, where a developer has decided to build a 355-unit apartment tower at a site where they had previously planned to build condos.

Brian Gordon, vice president of Chicago-based Magellan Development, said the proposed complex is geared toward young professionals and will have a 24-hour doorman, outdoor pool, movie theater and business center. The site in question is at 14th Street and LaSalle, a parking lot near Loring Park, a high-density residential neighborhood along the south edge of downtown Minneapolis.

High-rise development in the neighborhood has been controversial. An earlier proposal by developer Brad Hoyt to build a 21-story tower on a hill overlooking Loring Park was defeated. Hoyt changed course and now has some support for a 7-story building. Gordon said that they’ve owned the site for several years and had already received approval to build a 39-story condo tower, but scrapped those plans when the for sale market went south. Magellan scaled back this project to 36 stories and plans to present its plans to the Minneapolis Planning Commission in October, and could start leasing early next year for occupancy in early 2013. “We’ve gone through all the hard stuff,” Gordon said.

Developers have come out of the woodwork with proposals for thousands of new apartments in Minneapolis and St. Paul. The market is being driven by people who want to live in or near downtown, but aren’t willing to commit to buying a condo. Apartment vacancy rates in downtown Minneapolis have fallen to less than 2 percent — a near-record low — and developers are in a race to satisfy demand before the market gets saturated. Magellan comes to the Twin Cities with considerable experience in high-rise residential development.

The company is responsible for hundreds of apartments and condos in downtown Chicago, including Aqua, a striking 87-story combination condo and rental apartment building along the Chicago River near the shores of Lake Michigan. The building was completed last year and has nearly 2 million square feet of residential and commercial space. Professional Builder magazine said the company was the 35th largest builder in the nation this year.

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