Pioneer Endicott redo proving a hit in downtown St. Paul

Take a trio of century-old vacant office buildings, add developers willing to stick out their necks with the help of some historic preservation tax credits and mix in pent-up demand for high-end rentals in an urban setting.

That's the recipe for the transformation of downtown St. Paul's Pioneer and Endicott buildings, once the heart of the city's business district, into a luxury apartment complex more than half leased as construction wraps up this year.

"If you were going to take a risk during a recession, this was the deal to do it on," said St. Paul-based developer Rich Pakonen, who with property management executive Clint Blaiser bought the classical buildings at 4th and Robert Streets for $1.1 million in 2011.

Some $45 million later — including state and federal tax credits and tax-increment financing — former office suites have been reconfigured into studio, one- and two-bedroom units running from $865 to $3,200 per month. They feature modern kitchens and baths along with the high ceilings, large windows and wood floors that were original building features.

Pioneer Endicott is in the vanguard of a rental housing boom in downtown St. Paul, driven by interest in hassle-free urban lifestyles long on freedom and convenience.

The Penfield, a 254-unit luxury complex built by the city, is now leasing. A Lowertown parking ramp is being converted into the Rayette Lofts, with 88 market-rate units. Just across the river, West Side Flats with 176 units is set to open this spring.

And two blocks from Pioneer Endicott, developer Jim Stolpestad is converting the former downtown post office into the Custom House, a 17-story apartment building with an estimated 250 market-rate units overlooking the river.

While the real estate market is rebounding, rental housing has become popular because "people are a little leery about buying right now," said Mary Bujold, president of Maxfield Research Group. "They really don't know where the markets are going to go. And people want to have more flexibility so they can just pick up and move."

The combination of downtown convenience, old-world craftsmanship and flexible lifestyle was too much for Dan Shaw and Judy McKloskey to resist. Last month the retired couple locked up their suburban townhouse and moved into a large apartment on the 10th floor of the Pioneer with scenic river views.

"We've always thought that we wanted to live in the city, but neither one of us has ever done that," Shaw said. "So it's really an adventure for us."

About 80 percent of the Pioneer Endicott's 234 units are finished, and two-thirds of those are rented. The apartments should be finished in March, but work will continue on the complex's amenities, including a skyway-level patio and a pool, outdoor kitchen and dog walk atop the adjacent parking garage.

The Minnesota Museum of American Art has moved into street-level space in the Pioneer, and a fitness center sits next to the marble lobby on 4th Street. A wine shop will open this winter, and space is being built out for a future bar and restaurant.

Interest from outside

Much of the upscale rental market is directed at professionals in their 20s and 30s. But Shaw and McKloskey were the type of people — 50 and up and retired or close to it — that Pakonen and Blaiser thought also might find the Pioneer Endicott appealing.

"We had a gut instinct that we were going to see baby boomers … so we intentionally built about 25 percent [of the units as] two-bedrooms because we kind of felt that there was going to be a market for that demographic," Blaiser said.

What they hadn't necessarily counted on was the interest from outside St. Paul. About three-fourths of the people inquiring about Pioneer Endicott come from across the metro area, he said.

Samantha Ivey, 23, grew up near Rogers and recently graduated from St. Cloud State University. When she moved to the Twin Cities to attend law school, she said, she wanted something more than the typical student apartment. Last summer she moved into a live-work studio unit at Pioneer Endicott, where she can run her consulting business. It didn't hurt that the Minnesota Wild plays at the other end of the downtown skyway.

"I wanted something small and cute and near all the things that I liked," she said.

Historic structures

The St. Paul Pioneer Press opened its skyscraper in 1889, at 12 stories slightly taller than the nearby tower of the competing Daily Globe (four more stories were added in 1910). The two six-story Endicott buildings opened in 1890 on either side of the Pioneer; they were designed by Cass Gilbert, who kept his offices there for more than 20 years.

The buildings are on the National Register of Historic Places. Gilbert drew up the State Capitol there, and Ecolab was founded there by Merritt Osborn. Northwest Airlines opened its first ticket office there.

"They are among the very few surviving late 19th-century office buildings in the Twin Cities, and the Pioneer is the last surviving light-court building in Minnesota," said Larry Millett, a local writer and historian who will publish a book on the Pioneer and Endicott buildings this year.

Longtime St. Paul developer John Mannillo, who once owned, managed and restored the buildings, applauded what Pakonen and Blaiser are doing.

"These old buildings built for offices don't serve that purpose anymore," he said. "They are taking something they could never rebuild, and reusing it."

Pakonen has successfully developed other downtown St. Paul office buildings that found new life as condos, such as the Rossmor and the Lowry.

"There's a lot of development in Minneapolis, but there are a lot of customers who when they say they're going downtown, they mean St. Paul," he said. "We're there serving those customers."

Kevin Duchschere • 651-925-5035