Two luxury high-rise apartment buildings – the first in decades – will soon brighten the downtown Minneapolis skyline.
In a quiet neighborhood of squat brick apartment buildings on the south edge of downtown Minneapolis, Magellan Development Group is building a sleek, 36-story apartment tower with a raft of hotel-like amenities, including an indoor dog park and pet wash.
Ten blocks away, in the shadow of the 57-story IDS Center, the Opus Group is busy building its own luxury apartment building, a 26-story tower that will have direct access to the city’s skyway system.
By late 2014, both buildings will make the downtown skyline shine a whole lot brighter, but the biggest impact will be at street level. The developers are betting a combined $200 million-plus that these buildings — the first high-rise downtown rentals in decades — will bring hundreds of well-heeled residents to parts of the city where luxury housing has been scarce, and will serve as a catalyst for new shops, restaurants and services that cater to downtown residents.
“This will have a huge impact on the city,” said Tom Fisher, dean of the University of Minnesota College of Design. “But it’s going to bring a lot of changes on the ground.”
In a city where developers already are worried that the rental market is nearing saturation, the backers of these projects hope to set themselves apart by going skyward with the kind of luxury rental housing that’s common in New York and Chicago, where Magellan recently completed a 87-story residential tower. All of it is geared to the growing number of renters by choice, including young professionals and empty-nesters who favor the flexibility that comes with renting.
“If we’re going to compete with other major cities for talent, we have to have product and living options for people that are like what they’d find on the coasts,” said Tom Lund, vice president of real estate development for Opus Development Corp.
Indeed, high-rise rental housing is nothing new for the Twin Cities. In the early 1970s, a 39-story public housing complex now known as McKnight Towers was built, and was followed by several others, including Marquette Place and 110 Grant.
The developers of projects say that the latest generation of high-rise rentals is radically different — they’ve been designed to feel more like a high-end hotel rather than a rental.
“This is Minneapolis’ first attempt at the latest in high-rise living, which is very different from it was 30 years ago when we first did it,” said Lund.
The apartments in both buildings will be decked out like the city’s best for-sale condos, with floor-to-ceiling windows, tall ceilings and open floor plans with rooms that flow from one to the next. There will be full-service spas where residents can pamper themselves, rooftop sun decks and party rooms equipped with restaurant-quality appliances.
All of this comes at a cost. Residents will pay premium prices, ranging from $2 to $3 per square foot, which means that a simple studio apartment could cost more than $1,300 a month.
Developers say there’s no shortage of people who are willing to pay. The buildings will cater to the growing number of empty-nesters and young professionals, including the tens of thousands of downtown workers who are renting by choice.
At just less than 2 percent, the vacancy rate in downtown is among the lowest in the city, and with an abundance of Fortune 500 companies in the area and a relatively healthy economy, institutional investors have stepped up to help finance the projects. “Both projects demonstrate a deep confidence in downtown Minneapolis,” said Lund.
Both companies hope that by building tall and building fancy, they’ll stand out in what has become an increasingly competitive market.
More than 10,000 rental units have been proposed for the city, mostly in low-rise buildings — with a few exceptions. The historic 19-story Soo Line office building in downtown is being converted by a Michigan-based company into high-end apartments with retail on the first floors. Jim Stanton is building a 12-story condo tower in the Mill District. And Kelly Doran has proposed building a 9 to 11-story rental tower called “The Bridges” on the edge of the University of Minnesota campus.
“We know the rental market is going to be busy, so we need to stand apart from everything else that’s being provided, and we’re doing that with the amenities and with the height,” said Patrick Borzenski, project manager for Loewenberg Architects, the company that’s designing the LPM Apartments near Loring Park. “We need to stand out because we’ll be supplying 354 units and we have to fill it.”
At a time when some downtown retailers are still struggling, analysts are hopeful that such projects, filled with affluent renters, will serve as a catalyst for other kinds of development, including more retail and restaurants. “This is really driving a lot of interest from both local and national retailers,” said Lund.
Downtown’s population of more than 36,000 is already able to support a growing number of service businesses, including two grocery stores. A Whole Foods Market is under construction just a couple blocks from the Nic on Fifth, and the Target store on Nicollet Mall has served as a model for other urban locations.