Minneapolis' Ivy Tower once had a date with a wrecking ball. Now it's about to be part of a luxury hotel and condominium complex.
Surveying construction activity at his Ivy Hotel + Residences, developer Jeffrey Laux recently acknowledged that timing proved to be an ally in bringing the luxury hotel and condominium project to life.
"Construction financing is way tougher for anybody to get these days, especially anything with condos," he said.
Laux and his business partner Gary Benson got their financing for the $100 million project near the Minneapolis Convention Center in 2005, before the housing meltdown put the squeeze on credit markets.
That problem, along with a cool-off in condo sales, has forced some projects planned as hotel/condo developments to eliminate or postpone the condo component. Typically, proceeds from condo sales help finance the heavy capital outlay for building and outfitting a hotel. Without those funds, plans for a hotel and its amenities can get scaled back.
The Ivy, now nearing completion, hasn't faced that dilemma. Nearly all the 92 condos sold the first day the sales office opened in the fall of 2004. Only five units remain unsold, according to John Wanninger, a Coldwell Banker Burnet agent whose Minneapolis-based firm, Berg & Wanninger, is marketing the Ivy's condo units. The first condos will be ready for occupancy early next year while the hotel is to open late next month.
The Ivy had been vacant for several years and at one time was scheduled to be demolished before Laux and Benson bought it for $400,000 in 2000. Initially, they planned to transform the property to boutique-style offices, but they dropped that idea when the office market fell off after 9/11. "We also switched because we could see that residential sales were starting to develop," Laux said.
At first, the developers planned only a small addition to the original tower. That evolved into the final plan to nestle the older building between two new structures. One new 26-story tower houses the condo units. Another new 19-story building along with the old 10-story tower make up the hotel.
"We had the benefit of hitting the market when it was still hot," Wanninger said of the strong condo sales. The decision to target the top tier of the market with both the hotel and condos also allowed it to move forward while other condo-related projects faltered, he added.
The vast majority of buyers at the Ivy are purchasing second or even third homes, Laux said. While some live in outstate Minnesota and are buying "urban cabins" for visiting or doing business in the Twin Cities, others have residences in Chicago, New York, San Francisco and even Europe, he said. Those buyers are not depending on selling a home to buy at the Ivy.
The units initially were priced from about $250,000 to $2 million, but prices have been nudged up slightly since 2004, Wanninger said. Rising raw material and labor costs would make the development considerably more expensive, possibly deterring some buyers, if it were being started today, he said.
"It would be very hard to give people the same kind of residences they're going to be getting," he said.
The most expensive units were among the first to sell, and a couple of buyers purchased two adjacent units and combined them into one larger residence, he said. In one such case, a buyer will wind up with about 4,000 square feet.
The condos are somewhat larger than what's typical even for high-end developments, with the average units about 1,600 square feet. The units are not subdivided into several small rooms. The 3,300-square-foot penthouse has only two bedrooms, and all the units have floor-to-ceiling windows and 10-foot ceilings.
"We wanted to give people large, gracious residences," Laux said. "Why have something that's chopped up into little rooms, some of them guest rooms, that you might only use a half-dozen times a year? You can have people that visit you stay right next to you at the hotel."
Buyers were attracted by the fact that the hotel at the Ivy will be part of Starwood Hotel and Resort's Luxury Collection -- one of only 10 in the United States. Condo residents will be able to use any of the hotel's many amenities, including valet, food and maid service.
"If you need to have your car washed, your pets cared for, it can be done," said Paul Wischermann, whose Minnetonka-based Wischermann Partners will manage the hotel. "It's all the benefits of having staff, without any of the hassles."
Condo residents will use the same entrance as hotel guests, walking through the elegant lobby and being greeted by the hotel staff at the front door.
At the same time, hotel guests will benefit by staying at an establishment that includes a condo component. Besides fueling the initial capital outlay for the hotel, the project's overall scale makes it possible to offer features that might not otherwise be included in a 136-room hotel. An example, Laux said, is the 17,000-square-foot spa and health club.
"That's not something you would normally find if it were just a hotel of this size," he said.
Hotels in Starwood's Luxury Collection bill themselves as unique not only from competitors, but also from one another. At the Ivy, four of the suites in the historic tower take up an entire floor each, offering panoramic views. The $4,000-a-night suite at the top takes up two floors and will be furnished with a baby grand piano. All rooms have original artwork from a local artist, with all their furnishings designed locally and manufactured according to individual specifications.
The original tower, built in 1930, also contributes to the unique nature of the hotel. Laux said he was drawn to the building because of his longtime fondness for the city's historic buildings. He learned about the real estate business from his father, who managed the Minneapolis Grain Exchange Building in the 1970s. Laux and Benson renovated the Lumber Exchange on Hennepin Avenue in the 1980s.
The city's agreement with the developers, which included $6 million from tax-increment financing, called for the old tower to be rehabilitated so it could be included on the National Register of Historic Places.
The tower long has been considered an architectural jewel. It has Moorish arches and is the only ziggurat-style building in Minneapolis.
Laux said the building already has been nominated and under the register's rules should be included five years after its renovation is complete.
Susan Feyder 612-673-1723