The agreement hinged on the VA signing a lease to occupy part of the property, but the VA decided to stay put.
A $19.5 million deal for investors to buy the old corporate headquarters of Northwest Airlines in Eagan has fallen apart after the federal government reversed plans and nixed a move to the site.
Delta Air Lines, which merged with Northwest, had been planning to sell the 252,000-square-foot corporate office building to Government Properties Income Trust, a real estate investment trust in Newton, Mass. But the deal is off, the Atlanta-based airline confirmed Thursday, though it wouldn't comment further.
The sale hinged on the U.S. Department of Veterans Affairs (VA) signing a lease to occupy the entire office building, according to a filing the investment trust made with the Securities and Exchange Commission in August. The U.S. General Services Administration (GSA) the government's real estate manager, said Thursday that the VA will stay put at the Bishop Henry Whipple Federal Building at Fort Snelling.
The Whipple, a hulking white building motorists pass on Hwy. 55, is slated for a major renovation and the government had been negotiating to move VA staff from it. Most VA workers at the Whipple work on benefits. The Minneapolis VA Medical Center is nearby.
"Those two operations have been given a priority assignment by the president and the secretary of Veterans Affairs to cut down on a backlog of claims by veterans," GSA spokesman David Wilkinson said Thursday. "The VA decided that in order to meet that priority it would be best for them to remain in place during the renovation and after the renovation."
The VA signed an agreement in the last week or so to stay at the Whipple "another 10 years after the renovation is complete," he said.
Wilkinson couldn't elaborate on the backlog problem and VA officials couldn't be reached for comment.
Jeff Minea, a senior director at Cushman & Wakefield who was handling the deal, said the decision was sudden and that he received a letter from the GSA about it last Thursday.
"It is odd that they went from needing 250,000 square feet to zero in two weeks," he said.
Minea said they will probably market the site in two pieces: the corporate headquarters building with 33 acres, and the remaining 92 acres. He said he expects the city of Eagan to approve the division in early November.
Jennifer Bjorhus • 612-673-4683