A Minnetonka-based developer unveiled plans Wednesday to build a 33-story luxury apartment complex in the heart of downtown Minneapolis that would be the first high-rise rental building in the city in nearly 30 years.
The Opus Development Corp. project, expected to cost more than $100 million, is the latest in a series of new apartment buildings designed to accommodate a growing number of residents who either can't afford or aren't interested in home ownership.
"We have younger people who are waiting to enter the market," said Mary Bujold, president of Maxfield Research. "But it's a boomer issue, too, with those who say, 'We've been there, done that.'"
Last month, a Chicago-based developer announced plans to build a 36-story luxury apartment building near Loring Park. A $70 million apartment/grocery complex also is in the works for 222 Hennepin Av. S., site of a former Jaguar dealership. Meanwhile, developers in the Warehouse District have been converting historic buildings into loft-style apartments while parcels in the Mill District are designated for upscale rentals.
Amenities in the Opus proposal, which would be known as Nicollet Residences, would include a round-the-clock doorman and concierge service, a rooftop terrace, an outdoor fire pit and grill area, a pool, a spa, a fitness center and a yoga studio, guest suites and a dog-play area. The building's 333 units would feature 9- to 10-foot ceilings with floor-to-ceiling glass and will be designed to meet LEED certification, an internationally recognized energy efficiency standard, the company said.
Planning meeting Thursday
A discussion of the project is scheduled for 4:30 p.m. Thursday before the Minneapolis Planning Commission's committee of the whole.
If approved, the Opus tower will rise from what is now a surface parking lot on the old Powers department store site at Nicollet Mall and S. 5th Street. Opus has owned the land for more than 25 years. Construction would start next spring, and the first tenants could begin moving into the building in 2013.
"It's a very good location," Bujold said. "But a lot depends on timing and what other properties are being marketed at the same time."
Some developers remain skeptical about the demand for upscale rental housing.
"Generally, the people who make money on high-rise apartment buildings are the second and third ones who own it," said Steve Minn, a principal at Lupe Development Partners. "I respect those guys [at Opus], but I just think the high-end luxury market has its limit. Right now, it's more of a bubble than a trend."
Tom Lund, vice president of real estate development for Minnetonka-based Opus Development, said the project would offer a plush living experience similar to those found in San Francisco or New York. "Extensive amenities, a light-rail station and two skyway connections will be very attractive to a variety of residents looking for the flexibility of renting rather than owning," Lund said in a prepared statement.
Plans call for retail stores on the ground and skyway levels, a fine-dining restaurant, and skyway connections to Neiman Marcus and the Fifth Street Towers. The building would have 333 units with mostly studio, one- and two-bedroom designs and a smattering of penthouse-sized spaces. About 400 parking spaces would occupy floors 2 through 6.
Dave Menke, senior vice president and general manager of Opus Development, declined to specify rental rates but said they would be competitive with the marketplace. Bujold estimated that rental rates for a luxury high-rise apartment would be $1,500 to $1,700 a month for a one-bedroom unit and $2,100 to more than $2,300 for a two-bedroom unit.
Menke said in an interview that Opus expects to have the financing in place in the next 60 to 90 days. "It's the one development sector, product type, that obviously is in favor not only from the marketplace, but also from the capital side of it," he said, adding that he was confident the project would receive city approval. He said preliminary meetings with city staff have gone well, as did a recent meeting with the neighborhood association.
Renting a desirable option
Many people remain nervous about owning homes after the recent housing crash. And as the baby boom generation ages, some are trading in suburban homes with their high-maintenance yards for rentals in central business districts in what's been called a "back-to-the-city movement."
Menke said the company researched other cities including Chicago, where the trend toward urban high-rise rentals "is happening in a fairly major way."
"We think the demographics [in Minneapolis] support it. We think we're going to appeal to a very wide range of renters ... and we'll have every amenity imaginable and the convenience of skyway connectivity and the convenience of light rail that is clearly unique to our site," Menke said. "We're very excited."
Minn, however, believes the near-historic low 2.4 percent apartment vacancy rate in Minneapolis is under-reported because of the number of renters who are living in condos owned by others. "There are thousands of units in the pipeline and not all of them will be built," Minn said. "Everyone thinks they're an apartment developer these days."
Opus Development will be the developer of the downtown project and Opus Design-Build will build it. Opus AE Group Inc. is collaborating with Minneapolis-based Elness Swenson Graham Architects Inc. on the design. The Opus entities are subsidiaries of the Minneapolis-based Opus Group.
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