A Chicago group bought the historic Flour Exchange building in downtown Minneapolis for $7.5 million.

R2 Cos. purchased the 128,000-square-foot property last week from Larson Properties LLC, according to Hennepin County records.

The buyer’s portfolio skews heavily toward warehouses renovated as trendy office space. The firm owns real estate primarily in Chicago, but made its way into the Minneapolis market in 2014 by partnering with Goldman Sachs to purchase the 15 Building on the west side of downtown.

Last year, that building was adorned with a giant, colorful mural of Bob Dylan.

R2 acquired the Flour Exchange on its own, said Matt Garrison, R2’s managing principal.

“We are really bullish on downtown Minneapolis in general and want to make investments there,” he said.

The group has been actively searching for additional properties in the city and looked at many in the North Loop but saw them bid up to very high prices. North Loop office properties are now selling for an average price of $172 a square foot, according to Jones Lang LaSalle, a brokerage.

“The days of buying a building for $75 a square foot in the North Loop are probably over,” Garrison said. “So if you are looking for [that], you have to go to an area that is somewhat emerging.”

For the moment, that means the east side of downtown, where the new U.S. Bank Stadium and Wells Fargo office towers anchor a flurry of hotel, office, restaurant and residential construction.

“We feel the neighborhood has tremendous growth potential,” Garrison said.

The 11-story building, located at 310 4th Av. S. and dating back to 1893, is connected by skyway to the federal courthouse. Many of the building’s tenants are in the legal profession.

R2 plans to make incremental changes to the structure, gradually chipping at the traditional, white-walled appearance to “expose the historic bones of the building.”

“We understand some of them may not want that,” Garrison said, which is why the firm will first renovate the lobby and common areas and gradually transition vacated office space into what is commonly called creative use office.

The Grain Exchange building is located across the street and is highly regarded for the repositioning of its old trading floor into open, co-working space.

The success of the Grain Exchange, Garrison said, “demonstrates that there’s demand in the marketplace” for this type of historic reuse.