Update: Longtime developer, Schafer Richardson, is joining forces with the owners of the restaurant to build apartments. Here's a link to the latest details.
As hipsters and pensioners alike mourn the 2015 closing of Nye's Polonaise Room in Nordeast Minneapolis, speculation is blazing about the fate of the iconic buildings, which are perched along East Hennepin just a block from the Mississippi River.
The owners of the restaurant, which is actually four patched-together buildings of various ages, aren't talking specifically about their plans for the site, but various sources say there have been very, very preliminary discussions with at least one well-known and unnamed Minneapolis developer.
One thing is clear: Unless a buyer plans to continue running it as a restaurant, it's very likely the buildings will be bought by a developer and replaced with a modern high-rise. Though the buildings are situated in the heart of the St. Anthony Falls Historic District, which includes the historic milling districts on the east and west banks of the river, the buildings themselves don't have the kind of historic status that would automatically prevent them from being scraped. Here's a link to the St. Anthony Falls Historic District design guidelines, which governs development in the area. In fact, a recent update to the Nicollet Island East Bank Neighborhood Association small area plan calls for more high-density, pedestrian friendly development, especially along East Hennepin, which is slowly becoming the bustling commercial district it once was.
P. Victor Grambsch, President of the Nicollet Island-East Bank Neighborhood Association, said the group would not oppose demolition of the buildings and is in full support of a high-rise tower.
" We think it's unfortunate that Nye's is going, but no one is going to the barricades to preserve it," he said "This will be a relatively expensive site and they’ll [the buyers] will want to build something substantial and we're all in favor of that."
Doesn't matter whether it's rental apartments, condos or offices, he said, the group is more concerned that the mixed-use project that will bring more shops, restaurants and housing to the neighborhood. And the base of the building is more important than the shape of the tower because the No. 1 design priority is making the neighborhood pedestrian friendly. Grambsch said that a slender tower that sits atop a more slender two- or three-story podium is a likely scenario. There’s no height restriction in the area, which already has at least two residential towers with nearly 30 floors.
The site isn't without its challenges. Nye's shares the block with the Our Lady of Lourdes Church - a historic limestone church with a distinct steeple that's long been a neighborhood icon. Preserving and enhancing views of the church will be one of the design goals.
"We don’t see a fundamental conflict between a substantial, tall building and Lourdes Church," Grambsch said. "But they’re [the architects] are going to have get out their design chops because this will pose some interesting design challenges...we would like to have something that’s a visibly better piece of archtitecture than what’s there now."
If the buildings are demolished, it's likely the HPC will require the developer to memorialize the building in some way, with either a plaque or an architectural element that provides a symbolic reminder of the history of the building.
The Northeast side of the river is already in the midst of considerable development. Lennar Multifamily has an option to buy a once-contiminated site where it plans to build a mixed-use development that would eventually have two high-rise towers. And Alatus has an option to redevelop the Wasburn-McReavy Funeral Chapel site, where it has proposed building a 40-story apartment or condominium tower. Both projects have received support of neighborhood groups.
House prices in the Twin Cities and beyond are rising, but not as quickly as they did earlier in the recovery. That's according to the September S&P/Case-Shiller U.S. National Home Price Index, which shows that a 10-city composite gained 4.8 percent year-over-year, down from 5.5 percent in August. The 20-city composite gained 4.9 percent year-over-year, compared to 5.6% in August.
In the Twin Cities metro, prices during September increased 0.1 percent from the previous month and 3.1 percent from last year. That's slightly behind a the 4.8 percent annual gain for the National Home Price Index, which covers all nine U.S. census divisions.
Though price gains are moderating, the report noted several statistics that bode well for a continued recovery. Housing starts held above one million at annual rates because of gains in single-family homes, sales of existing house are rising, builders’ sentiment has improved and mortgage default rates are at pre-crisis levels. This following chart shows house prices in the Twin Cities house prices through September.
The U.S. commercial real estate market moved from hot to “on fire” in the third quarter this year, according to a new Real Estate Research Corp. report that draws several parallels between current market trends and those of pre-recession 2007.
An increase in “undisciplined off-shore” capital is pressuring the commercial real estate prices in the United States to escalate, particularly in secondary and tertiary cities. Additionally, the RERC report – titled “Prices Pressure Values” – juxtaposes the increase in available capital with the loosening of underwriting standards, i.e. a commercial bank’s own rules governing debt and lending.
While the report’s authors offer up cautionary data, they also soften the information by pointing out several regulatory standards and market conditions that are in sharp contrast to those of 2007.
“As the commercial real estate market shifts from being hot to being on fire, there is increasing concern over the prices investors are paying, as well as the risks that lenders are taking on,” wrote Constantine Korologos, managing director of Situs, the parent company to RERC. “It is normal to be apprehensive, but investors should be careful not to confuse where we were seven years ago with where we are today.”
Korologos appears to be spurring his readers toward continued investment by outlining the differences between the present environment and the mistakes of our recent past that led to the meltdown:
In the end, Korologos says rising liquidity and competition are positive signs, but reminds investors to keep their eyes open and remember market basics: supply and demand, and vacancy, rental, yield, interest and cap rates.
A Kirkland, Washington investor has doubled its holdings in the Twin Cities metro. Weidner Investment Services paid a Chicago, IL based real estate venture more than $78 million for three suburban Twin Cities apartment properties with a total of 606 units. Abe Appert, Keith Collins and Laura Hanneman of CBRE’s Multifamily Group Minneapolis office represented the seller.
Weidner has acquired six apartment complexes in the Twin Cities metro during the last 13 months, bringing its total holdings to 1,236 units, with an additional 138 unit project currently under construction. The company already owns more 40,000 apartments in the US and Canada.
The most recent deal includes Greens at Edinburgh in Brooklyn Park, Plymouth Square at 37th in Plymouth, and Town Centre at Lexington in Eagan. Those buildings have packed with amenites, including underground heated parking, swimming pool(s), community rooms and fitness centers. The deal follows the sale of several just completed apartment buildings in downtown Minneapolis, including the Nic on Fifth and Velo.
The big news this week is that the Opus Group sold the barely used 253-unit Nic on Fifth building in downtown Minneapolis for what's rumored to be a record price for a Twin Cities apartment building.
What's next? The 222 Hennepin development in the heart of downtown Minneapolis, including 286 luxury apartments and a 40,000 square-foot Whole Foods store, hit the market this week and is expected to close within the next few months. (Here’s a link to the listing.)
This flurry of deals represents an unusual moment for the Twin Cities apartment market, which is benefitting from steady declines in the homeownership rate and a better-than-average jobs recovery. National investors can't resist. Apartment building sales (based on volume) this year could set a record depending on when the 222 deal closes. Stay tuned for more coverage on this topic.
Minneapolis-St. Paul does not have the cheapest housing stock in the nation, but its higher wages make it the most affordable city for home ownership among the 25 largest U.S. metro areas, according to a new report.
Interest.com calculated its new rankings based on several criteria. The study found that the median household income in the Twin Cities is a little more than $67,000 -- nearly $15,000 above the national average -- and the median-priced home is nearly $213,000.
The margin isn't as great as last year, but the median income exceeds the wage requirements for purchasing a home by 23 percent. These figures, when combined with median property taxes and homeowners insurance rates, helped lift Minneapolis-St. Paul from the No. 2 spot in 2013 to No. 1 this year.
“The places that are the most unaffordable are locked in by some geographic constraint. Minneapolis (area) can grow 360 degrees. Most of the time when you talk about this, you talk about sprawl and you think of it in negative terms. But the bottom line is,sprawl keeps your prices down," said Mike Sante, managing editor of Interest.com.
Atlanta won the crown last year, but swapped rank with the Twin Cities this year. St. Louis, Detroit, Pittsburgh, Baltimore, Phoenix, Washington, Dallas and Houston rounded out the top ten.
Interest.com suggests that median-income workers cannot afford a home in the remaining large metro areas because the wages don't match the real estate costs.
San Francisco, not surprisingly, scrapes the bottom with San Diego, New York, Los Angeles and Miami also receiving "F" scorecards. Moving up from the bottom, the other unaffordable cities are Boston, Seattle, Sacramento, Milwaukee, Denver, Portland, San Antonio and Tampa.
“Low mortgage rates are helping home affordability to some extent, but the key ingredient – which has been missing to this point – is substantial income growth,” Sante said in a statement. "Affordability would improve at a faster pace if wage growth would pick up."
For comparison, the median-income earner in Minneapolis-St.Paul may make about $10,000 less than the median-income earner in San Francisco. But, the median-home price in the Twin Cities is $213,000 to San Francisco's $770,000 -- a gap that the wage difference doesn't even come close to making up.
Sante says Minneapolis-St. Paul has a great housing market with better median-priced inventory than other cities, but says wages have to keep growing.
Year-over-year wages grew by an average of 2 percent across the 25 largest metropolitan areas, but the Twin Cities only grew 1.38 percent this year.
“If that continues, homes in the Twin Cities will be much less affordable in a decade,” Sante said.