business

With the sour economy continuing to stall many developments, it's refreshing to see one that's no longer a vacant lot. That's the case with Solhem, a 60-unit apartment project now being built on a prime site in Minneapolis' Uptown neighborhood.

It's the first building project for Twin Cities real estate investor Curt Gunsbury, who owns three other small rental properties in the area. Gunsbury and a small group of partners bought the site on Holmes Avenue between Lake and 31st Streets in 2007. The small Nob Hill hardware store that occupied part of the parcel was demolished this past September to make way for the development, and construction of the apartment building began in October. Gunsbury said he expects the project to be completed in September.

Gunsbury's original plans were for a boutique hotel, giving Uptown its first hotel since the Hotel Carling on Hennepin Avenue closed more than 30 years ago. The hotel plans got city approval, but the project stalled, partly because of difficult financing conditions that began plaguing commercial projects late in 2007 as an offshoot of the meltdown in the subprime home lending market.

By early 2008, Gunsbury had decided to develop an apartment building instead. "A principal concern was how much office square footage was going to get built in Uptown," he said. Although he thought the hotel would be able to attract leisure travelers, he said the area might need more office buildings that could help supply business clients for the hotel.

The change in plans may have been fortunate, at least in the near term. The economic crisis has put a lid on both leisure and business travel around the country. The Hotel Industry Pulse index, compiled by e-forecasting.com and Smith Travel Research, recently reported that the hotel industry nationwide has been in a recession for the last 16 months. Smith Travel also has forecast lower hotel occupancy and room revenue for the next year.

The basic shape of the building didn't change much after Gunsbury made the switch from a hotel to an apartment building. It will be six stories tall, with ground-level retail that could include some service-oriented merchants for residents or perhaps a wine bar, he said. There will be a dozen floor plans for the studio, one- and two-bedroom units, with rents from about $1,200 to $2,400, he said.

Gunsbury said the project will incorporate many environmentally friendly and energy-efficient features, including a green roof, wood floors and solar-heated water.

He declined to say how much the project will cost. The AFL-CIO Housing Trust last year posted $10.1 million in bonds for the development.

As for the name, Solhem, Gunsbury insists that it's just a coincidence that it's an anagram for the building's location on Holmes. He says he first heard of the word, which translates as "Home of the Sun," from a Swedish friend.

Susan Feyder • 612-673-1723