Big names come bidding on Nicollet Mall

Article by: JENNIFER BJORHUS , Star Tribune
Updated: November 30, 2010 - 10:00 PM

In unrelated deals, Target Corp. bought a building and the Pohlads are vying for properties on the same block.

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United Properties is interested in properties on the last major block poised for redevelopment on Nicollet Mall’s south end.

Photo: Kyndell Harkness, Star Tribune

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Two of the biggest business names in the Twin Cities are moving to control some key real estate on Nicollet Mall.

Target Corp. has paid the Church of Scientology $3 million for 1013 Nicollet Mall, an old two-story building across the street from Target's headquarters on the mall, according to documents filed recently in the Hennepin County assessor's office.

Meanwhile, United Properties, owned by the Pohlad family, is negotiating a deal with the developers of the Nicollet, who own four parcels on the same block, to redevelop that site. First an ambitious condo tower, then a mixed-used tower, the Nicollet never got off the ground and the block remains the last major site poised for redevelopment on the south end of Nicollet Mall. Some developers regard the location as a crown jewel, if somewhat frayed.

Bill Katter, a senior vice president at Bloomington-based United Properties, said the two property deals are "completely unrelated," although he didn't rule out the possibility of discussing his group's project with Target when it starts looking for potential tenants.

Katter is also leading United Properties' makeover of the Ford Center next to Target Field.

Katter said United Properties is discussing a "strategic alliance" with the Nicollet's developers, Pratt Ordway Properties in Vadnais Heights, and that it involves three of the four parcels that were part of the Nicollet project. The deal does not include 1000 Marquette Av., which is home to the historic Handicraft Guild Building.

Katter said he wouldn't comment on the form of the agreement the two parties have, only that it involves developing an office building on the site that could have some retail too. The city had approved the preliminary plan for the 50-story Nicollet tower, Katter said, but his group would likely build something shorter now.

"It's pretty early," Katter said. "We don't even have a preliminary development plan yet."

Katter said he does not know what Target plans to do.

Target would only confirm that it bought the building but wouldn't say why or what it has in store for it.

"Target is always looking to provide new opportunities to support Target's long-term growth," a spokeswoman said in an e-mail response.

Right price for Target?

That building, built in 1914, came on the market last summer and had plenty of interest, said Paige Rickert, a senior vice president at CB Richard Ellis who handled the sale. Rickert said the building was "in decent shape."

The Church of Scientology, based in Los Angeles, recently moved to a temporary spot in St. Paul while it renovates the former Science Museum of Minnesota building at 505 Wabasha St. N. Property records show it bought that building for $3.5 million in 2007.

Real estate professionals in downtown Minneapolis speculated that Target simply wants a foothold on a high-profile block but has no immediate plans for new offices there primarily because the company already has plenty of room to expand. Nearly two years ago Target eliminated 1,000 workers -- about 9 percent of the workers at its downtown Minneapolis headquarters.

The retailer may have just picked up the building because the price was right.

In 2008, Target Commercial Interiors opened up down the mall in the old Crate & Barrel store in the Young-Quinlan Building at 9th Street and Nicollet Mall.

Sam Grabarski, president and CEO of the Minneapolis Downtown Council, said Target is good at planning for the future.

"If Target continues to see downtown Minneapolis as the fertile site for its continuing growth as an international company, that would be extremely good news to the business community because downtown is well-served by their presence," he said. "They attract the young, bright, up-and-coming creative minds of the United States."

A parcel of properties

Target is downtown's largest employer with about 20,000 people between its corporate headquarters at 1000 Nicollet Mall, and at City Center at 33 S. 6th, formerly known as the International Multifoods Tower.

The deal, which closed Nov. 14, doesn't net Target much space. The modest old building is only about 9,000 square feet. The Church of Scientology bought it in 1996 for $630,000, and it has a 2010 estimated market value of $1.9 million, property records show.

It's sandwiched between the WCCO-TV building and 1001 Nicollet Mall, which is part of the Pohlad deal. That building has been largely vacant since Let It Be Records left a few years ago.

At one time, the old Scientology building was a key piece of the Nicollet project puzzle, and the developers tried hard to buy it but the Scientologists held out, people familiar with the project said.

The parcels that the Pohlads' United Properties is interested in -- which also include 81 S. 10th St. and 87 S. 10th St. -- are owned by Tenth and Nicollet LLC, the group that was developing the Nicollet. The group includes Dan Hunt of Minneapolis-based Hunt Associates, and Len Pratt and John Ordway, both principals of Pratt Ordway Properties. Dan Hunt, a condo developer, filed for Chapter 11 bankruptcy over the summer.

John Ordway on Tuesday called the deal preliminary. "We're working with United Properties potentially to develop the site, but there's no contract," Ordway said.

Ordway said his group may sell the parcels or could bring United Properties on as a partner.

Ordway said he was aware Target bought the Scientology building next door, but said he had no idea what Target's intentions are. He said Target has said in the past that it was not interested in the site.

Dan Hunt's Chapter 11 bankruptcy has nothing to do with the group's decision to sell the parcels, he said, and doesn't affect the agreement with United Properties.

Ordway said any office property that United Properties develops "would probably be multi-tenant," and not built for a specific user. How far out could that be?

"It could be a while," he said.

Jennifer Bjorhus • 612-673-4683

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