The Foshay Tower won’t be overshadowed after all, at least for now.
Franklin Street Properties Corp., the real estate firm that last year proposed building a 50-story tower next to the Foshay in downtown Minneapolis, said late Tuesday that it will instead redevelop the four-story building that’s already there.
“After extensive costing analysis with our potential development partners and outside professionals, we have decided to redevelop the existing building ourselves, rather than raze it and build a new, mixed-use tower with outside development partners,” Franklin Street said in a filing with securities regulators.
The decision is an abrupt turn for one of the most ambitious real estate projects in the Twin Cities. The building would have been the city’s fourth 50-story tower and the first built since the Capella Tower, originally known as First Bank Place, went up in 1992.
Franklin planned to combine a hotel, offices and apartments in a slim tower that would rise next to the 29-story Foshay, the art deco building that was the city’s tallest for 40 years and is now a luxury hotel.
In a conference call with investors and analysts Wednesday morning, Jeff Carter, a Franklin executive, said the hotel and apartment portions of the project proved too expensive. As a result, Franklin and its local partners concluded the "total project costs were too far off of expectations to be feasible," Carter said.
The skyscraper would have replaced a short building now known as the TCF Building, a century-old, heavily remodeled structure that shares an atrium with the 17-story TCF Tower. TCF Financial Corp. has moved many of its workers out to a new corporate campus in Plymouth.
Franklin will continue to work with three Twin Cities firms — developer Ryan Corp., architecture firm Perkins+Will and leasing agent CBRE Corp. — on the renovation of the smaller building that will cost $15 million to $18 million. It recently added a health club and made other updates to the taller former TCF building and is nearing a major lease agreement in that one.
Two months ago, Franklin executives told investors they were making progress on their plans for the TCF Building site, which is at Marquette Avenue and S. 8th Street, diagonally across from the IDS Center. TCF Bank’s lease expired in January.
Franklin Street’s plan was to stack a hotel, offices and apartments on top of each other, something that hasn’t been done in a Twin Cities skyscraper.
The proposal was complicated, however, and was expected to lead to different owners and operators for the various portions. That type of construction tends to be more expensive than a single-use, single-owner tower.
In addition — with the apartments planned for the top — the likely rent needed to cover the construction cost would have well exceeded the Twin Cities standard. The cost for building the hotel, in a relatively constrained piece of land, would have also required above-market rates, increasing the investment risk for Franklin and its partners.
Franklin had not released a precise height for the 50-story structure, renderings or the ratio of hotel, office and apartment floors.
The decision not to proceed with the skyscraper leaves a 35-story tower planned by Bloomington-based United Properties for the old Nicollet Hotel Block as the tallest project underway in Minneapolis. United plans a 300-room luxury hotel topped by 164 residences for the block at the north end of Nicollet Mall.
The developer earlier this month said it is near agreement with Four Seasons Hotels & Resorts to operate the hotel.