Development abounds in the North Loop neighborhood in Minneapolis, but one thing is missing from the action: condos.
Curt Gunsbury and Robb Miller hope to be the first to change that. The Twin Cities development duo are deep in the planning stages of 602 First Street, a 24-unit boutique condo building on a quiet street between the parkways along the Mississippi River and the traffic of Washington Av.
"It's an amazing site in the quietest corner of an active and fun neighborhood," Gunsbury said.
The development duo, which has already built hundreds of apartments in the neighborhood, plans to build a sleek, eight-story glass and steel building that will offer buyers an alternative to the existing condo stock. Each floor will have only four units — one on each corner.
Each will have large terraces and patios with room for pot gardens and al fresco dining. If approved, it's expected to be ready for occupancy by the middle of 2016. Prices haven't been set but, with units from 2,000 to 4,000 square feet, some will cost more than $1 million.
In the 1800s, the North Loop was the heart of the city's manufacturing and warehouse district. It was a gritty, industrial zone crisscrossed by railroad tracks, dotted with loading docks and smokestacks.
Today, the area is one of the city's hottest neighborhoods and has been ground zero for its apartment boom. Hundreds of upscale rental apartments are being built to cater to a growing number of renters by choice, mostly young professionals who can't make a long-term commitment to homeownership, and empty nesters from the suburbs who want a test of life in the city.
"The North Loop is the first choice of many moving downtown, and a product like this does not exist in the area," said Fritz Kroll, a North Loop resident and real estate agent who works in the neighborhood. "Proximity to the riverfront and neighborhood retail/restaurants is good. It's also an area that is predominantly residential — a quiet pocket."
Until now, condos haven't been part of the development mix. Several condo buildings were built before the housing crash, but it's been nearly a decade since there's been a new one in the North Loop.
Kroll and other agents say there's plenty of demand for new condos in the city, but so far only one project has been built: Stonebridge Lofts in the nearby Mill District, which is nearly sold out after opening earlier this year.
"For the right product, yes, there is a pent-up demand," said Joe Grunnet, broker at the Downtown Resource Group. He said he's sold almost 100 condos so far this year and half of them never hit the Regional Multiple Listing Service.
Jim Stanton, developer of Stonebridge, has proposed building The Eclipse, a high-rise condo building along the edge of the North Loop, but hasn't yet presented final plans to the city. Grunnet said that he's working with three prospective developers right now and expects more projects to hit the drawing boards over the next two years.
There are now fewer than 150 condos on the market in downtown and surrounding neighborhoods, a 3 percent decline from last year, according to the Minneapolis Area Association of Realtors. At the current sales pace, there are enough units to last 2.7 months, compared with five months for the entire market.
Developers, however, have been reluctant to invest in condos. In part that's because they are subject to state construction defect laws that make them vulnerable to lawsuits for a decade after construction. As well, financing a condo project can be particularly challenging. Banks have been leery of condo construction since the 2008 downturn and most require a significant number of presales before construction can begin.
The 602 First project comes with another challenge. It's located in the overlapping St. Anthony Falls Historic District and the Warehouse Historic District, so its design will be carefully reviewed to make sure that it conforms with strict design guidelines.
But Gunsbury is not trying to mimic the neighbors with 602 First. With sweeping floor-to-ceiling windows and brick only on the main level, it'll make its own statement while staying true to the scale and structure of nearby buildings.
"We're going to be very transparent that this is residential, not a factory," Gunsbury said. "We're not trying to imitate them, we're trying to play with them and engage them and create a contrast that is complementary."
The building would replace two nondescript buildings. The Security Warehouse building at 602 First St. was built in 1936, and a one-story block building at 606 First St. that was built in 1958 and is now used as a parking garage for the adjacent Garr Scott Lofts apartment building.
The project has already been through an informal review process that includes members of the city planning commission, the Heritage Preservation Commission and a neighborhood group. Response was favorable, Miller said, but some tweaks will be made before it heads to full review by the HPC and the Planning Commission's Committee of the Whole.
"I'm fairly confident that we'll proceed with it," Gunsbury said. "But it's really complicated."
Kroll, chair of the North Loop Neighborhood Association's Livability Committee, is also optimistic.
"Neighbors that I have spoken to are excited to see this project come online," he said. "There has been so much growth in the neighborhood, and people are happy to see the North Loop continue to grow."