For nearly a decade, residents of a quiet corner of downtown Minneapolis have watched weeds sprout and trash accumulate around the unfinished concrete parking garage of what was supposed to be one of the city’s most exclusive condo towers.
Once known as the Reserve, the project was the victim of bad timing. Its developer started building just as the housing market began to crash, forcing it into foreclosure. Since then, a tall chain-link fence has surrounded the site at N. 1st Street and 4th Avenue N.
“For everyone who lives in the neighborhood it’s been a huge eyesore,” said David Decker, who can see the project’s remains from his deck.
But a recovering housing market could mean new life for the site and several others in the city that were once slated for condos. Twin Cities-based Sherman Associates plans to build a five-story building with 140 luxury apartments in a historic district just a block from the Mississippi River.
The project, expected to get approval from the city early next month, comes after many years of false starts and speculation about the unfinished project, and at a time of a radical transformation of the housing market. Several prime sites once intended for condo projects are getting repurposed for apartments to satisfy the growing number of renters-by-choice flooding the market.
Sherman Associates, one of the biggest players in the residential development scene, said last summer that it was buying the 1.1-acre site in the North Loop neighborhood in Minneapolis.
In 2002, Bejco, a prominent Chicago developer, planned to build an eight-story luxury condo tower, but that was delayed by a contentious approval process over the height of the building, which sits in the heart of the St. Anthony Falls Historic District.
The project and several others were also dogged by bad timing. After pouring the footings and the first two levels of the parking garage, the project went into foreclosure and ended up in the hands of the lender, New York-based Lehman Bros. As the neighborhood around it developed and matured, the stalled project became an eyesore.
Other dormant sites wake up
Though the Reserve was the only stalled condo project that was actually under construction, there are at least a half-dozen sites throughout the city that were intended for condos that sat dormant, but are now under construction. That includes a site where Magellan Corp. is building a high-rise apartment building, and the former Pillsbury A Mill building, which is being converted into rental housing for low-income artists.
Though the North Loop has nearly a dozen apartment buildings underway, Decker said that this one has been especially well-received because the fence has been a physical and visual barrier for people walking to the playground and parkway along the river.
“The whole neighborhood is really excited that it’s moving forward,” he said. “To have something nice on the corner will definitely be an attribute.”
Decker is co-chairman of the North Loop Neighborhood Organization’s planning and zoning committee, which gave its support to the project at a recent meeting.
Architectural renderings of the project show a five-story building with two levels of underground parking that will be clad with brick and metal reminiscent of the historic buildings that used to dominate the neighborhood. The cost of the redevelopment project was not disclosed.
Tony Kuechle, a project manager for Sherman, said that before construction can begin this summer, about 95 percent of the existing structure will have to be demolished.
Though the Reserve project was a victim of the worst housing crash since the Great Depression, that downturn helped revive the rental housing market, sparking unprecedented demand for apartments, especially upscale units with the kinds of amenities available in condominium buildings.
At the end of last year the average apartment vacancy rate in downtown Minneapolis was 2.2 percent, according to Marquette Advisors, and developers are racing to satisfy demand. Throughout downtown there are more than 2,100 units under construction, with proposals for thousands more, according to Mary Bujold of Maxfield Research. Much of that development is happening in the North Loop, where there were still many opportunities for redevelopment in old warehouses and on surface parking lots.
Abe Appert, first vice president for CBRE/Capital Markets, said it’s a prime area well-suited for apartments because of its proximity to sports stadiums, the Central Business District and other amenities.
“The North Loop is hot,” he said. It’s the “new, more sophisticated Uptown.”