After being forced out of the auto business in the 1920s, Merritt J. Osborn created innovation after innovation, from carpet cleaner to dishwashing soap, at his St. Paul company called Economics Laboratory, known today as Ecolab.

Nearly a century later, Osborn’s name will take the place of Ecolab atop its former headquarters building as developers remake it in hopes of attracting firms with his entrepreneurial spirit.

For St. Paul, the redevelopment of one of its tallest buildings is viewed as a way to spearhead growth downtown.

“There are a lot of companies succeeding here,” said Rich Pakonen, a St. Paul-based developer who also redeveloped downtown’s historic Pioneer Endicott complex. “What we’re going to prove is that the environment here works.”

Pakonen is one of the local investors who paid a bargain-basement $3.6 million to the out-of-town owner, Haddington Associates, for the 20-story, 280,000-square-foot office tower in a deal influenced by Mayor Chris Coleman and Ecolab Chief Executive Doug Baker. Ecolab, one of downtown St. Paul’s largest employers with more than 2,000 workers, recently decided to consolidate and move its headquarters into the nearby 17-story tower that was vacated by Travelers Cos.

“We went to the [building] owners and said it’s not worth anything once we leave and we can help you steer it in a way that’s beneficial to St. Paul,” Baker said in an interview. “We had higher offers than the one we took, but we wanted this in the right hands.”

The building, which is valued about $11.4 million according to Ramsey County property records, has been occupied by Ecolab since it opened in 1968.

The building owners had offers from several different developers, including Jim Crockarell, who is one of downtown’s largest property owners and wanted to convert some of the space into housing. Baker invited the mayor to listen to the presentations by the finalists.

“We picked the one that was most helpful for downtown St. Paul,” Baker said. “We wanted more office space. More workers.”

In 2006, nearly a quarter of the office space in downtown St. Paul was empty, according to the Greater St. Paul Building Owners and Managers Association, or BOMA. As of last year, the figure improved to 16.6 percent.

Still, the city has faced challenges. In March, supercomputer company Cray, which St. Paul courted in 2009, moved from the Cray Plaza near Mears Park to the Offices at MOA tower in Bloomington. Cray’s move follows software firm When I Work, Inc.’s departure from St. Paul to Minneapolis last year.

Joe Spartz, president of St. Paul BOMA, said the redevelopment of the tower, which will be called Osborn370, is a chance to create new momentum in the downtown St. Paul market. “Everybody wants the big employer that can take up 100,000, 150,000 square feet,” he said. “Bringing in many, many smaller employers that grow and stay in your area is a much healthier way, a slower way, to drive the office market.”

The new owners of the Osborn370 expect to invest up to $20 million to redevelop the 1960s-era building. The changes including enhancements to the building’s common areas, such as redoing the terrazzo floors and lighting in the lobby and possibly adding a corner area that would offer beverages and light food. The expansive outdoor courtyard in the back of the building will also get a refresh.

“Osborn370 is our IDS Center,” said Tanya Bell of Grand Real Estate Advisors, one of the partners of the development. “This is a well-built headquarters building that is centrally located downtown.”

Bell, a veteran commercial real estate developer and leasing agent, said the model is akin to 100 Washington Square in downtown Minneapolis, which was updated for tech firms.

“If you are trying to get world-class employees, St. Paul is just an ideal location for offering a vibrant urban environment and a lot of access to workforce and a lot accessibility for the workforce,” said Scott Burns, one of the investors of the Osborn370 and also a downtown business owner.

Burns, who sold St. Paul-based GovDelivery for $153 million last year, and veteran Twin Cities technology marketer Chip House have joined with an Indianapolis venture capital firm to launch Structural, a producer of employee management software that will be one of the first tenants in Osborn370.

Other partners include Minneapolis developer Schafer Richardson, Bloomington-based Halverson and Blaiser Group and Chasing Growth LLC, which is owned by Burns and local entrepreneur John Bergstrom.

The sale just closed at the end of last month and the Osborn370 is already 25 percent leased. The new owners expect to be 50 percent leased by December. Confirmed tenants include engineering firm KLJ, Bridgewater Bank, Paul Davis Restoration, and software companies OppSource, Lighthouse Software, Structural and Reeher.

Bloomington-based Bridgewater Bank plans to open its first branch in the east metro in the Osborn’s first-floor lobby. The customer representatives will be open to the rest of the space and the bank will have another half floor of space upstairs.

The branch, the bank’s seventh location, will be untraditional, but “this works in that building,” said Jerry Baack, the bank’s president and chief executive.

“It’s kind of neat that it’s going to be interactive with the rest of the lobby with the rest of the amenities down there,” he said.

Andy Reeher, a former Deluxe Check executive, who started his Reeher LLC in 2002, now employs 60 workers who assist more than 115 colleges with fundraising. They are located in three separate offices at the Blair Arcade building at Western and Selby avenues a mile from downtown. He expects to move into Osborn370 in December.

“Our business might have moved to the Minneapolis Warehouse District or Northeast” Minneapolis, Reeher said. “To be able to move into a tech-oriented building with great potential in downtown St. Paul is great.”

The Osborn370 joins several other downtown St. Paul buildings that are being redeveloped. The former Macy’s building, which has been renamed the Treasure Island Center, will become office space and a practice center for the Minnesota Wild when it finishes construction. The old Woolworth building, now called the 428, is also being redeveloped as office space.

“This is an indication of where we are going and the fact that private investors are agreeing and investing and bringing in new companies and retaining existing ones, those are all good signs,” said Brenda Kyle, recently selected president of the St. Paul Area Chamber of Commerce.

 

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