For a decade, Michael and Ann Roess watched new life and energy trickle back into the east side of downtown Minneapolis. Now, they want to join in.
The husband-and-wife team believes the neighborhood can now support bold growth, and they plan to put their own stake in the ground with a 10-story hotel on Washington Avenue, just a couple of blocks from the new Vikings stadium.
The couple, which have owned a triangle-shaped parking lot at 903 Washington Av. S. and the adjacent Wasabi Fusion and Sanctuary Restaurant building for 11 years, are joining a boom in hotel construction downtown.
Nearly every other large developer in the city has a hotel project downtown, and a five-block stretch of Washington appears likely to become a concentrated corridor for them.
“We feel good about the hotel cycle, and we feel really good about our location,” said Michael Roess, who is president and chief executive of iMetro Property. “While there are a number of hotels in the planning process, we feel there’s still capacity.”
Roess said their $35 million project will be different by forgoing national hotel brands in exchange for local control, sourcing and flavor. It’s being called the Stone Arch Hotel in a nod to the nearby pedestrian bridge over the Mississippi that is the Mill District’s signature tourist attraction. Roess hopes to open it before the city hosts the Super Bowl in 2018.
“Right now in Minneapolis, there aren’t any independent hotels; they are all corporate,” he said. “The consumer has choices in other cities, and we felt like it was time for that in Minnesota.”
The 138-room hotel will have two front doors with a 5,500-square-foot restaurant oriented toward bustling Washington Avenue and a hotel lobby and valet drop-off facing U.S. Bank Stadium, less than two blocks away. Roess wants the property to use as many products from local companies as possible, including the architect, Burnsville-based Reprise Design, and Montaggio in the North Loop for its plumbing fixtures.
“It is more expensive to buy local, but we wanted to make a statement,” Roess said. “We all live here and work here and wanted to recognize that.”
This isn’t the duo’s first shot at developing the parking slab. Two years ago, they pitched a $3 million, three-story restaurant and retail building, but Minneapolis officials said it wasn’t ambitious enough in size or use.
With the two 17-story Wells Fargo & Co. office towers and the new Vikings facility in the final stretch of construction, developers see an emerging market for both business and pleasure visitors.
Minneapolis-based Sherman Associates is planning a hotel for inside the historic Thresher Square building one block away. That’s in addition to Sherman’s existing Aloft hotel, which is next to Golden Valley-based Mortenson’s proposed 188-room Hyatt Centric. Both the Aloft and Hyatt Centric are across the street from the site of the Roess’ proposed hotel.
Ryan Cos., the Minneapolis developer of the Wells Fargo towers, broke ground Tuesday on a Radisson Red hotel that will be kitty-corner from Thresher Square. And the Depot Renaissance Hotel, about three blocks to the northwest, is adding 110 more guest rooms.
Downtown Minneapolis is adding hotel space at a faster rate than the rest of the metro area, said Mark Eble, managing director for the Midwest at PKF Consulting USA. The firm forecasts that the growth of hotel supply will somewhat outpace growth in demand in the Twin Cities, which would lead to flat or slightly declining occupancy levels in the coming year.
In downtown Minneapolis, hotel occupancy was just over 71 percent in the first half of 2015, up from 69 percent in the first half of 2014. Downtown hotels also experienced a 6.4 percent jump in per-room revenue in the first six months this year.
Local developers say there is still space in the Twin Cities market, and downtown Minneapolis, for more hotels, but that the peak isn’t far away.
“The fact that we own the land and have low debt, if we do see the end of the cycle we are confident we can weather it,” Roess said. “We would build this even if we were in a recession.”