$100M Thresher Square development fills Downtown East gap

A Minneapolis developer is planning an ambitious $100 million mixed-use project including a skyway connecting several of downtown's most dynamic neighborhoods.

Sherman Associates is finalizing long-awaited plans to build 175 apartments, 30,000 square feet of retail and two levels of underground parking on a block that fronts Washington Avenue between Chicago and Park Avenues.

A skyway with an entrance near the corner of Washington and Chicago avenues would provide access to miles of downtown skyways, including those that will link the new Vikings stadium to the rest of the city's climate-controlled network.

"We've always planned on redeveloping that site, but given what's happened [with nearby development] it allowed us to put together a well-crafted plan for the site and move it along faster than we anticipated," said Tony Kuechle, Sherman's senior vice president of development.

That block is anchored by the Thresher Square building, a historic brick-and-timber structure facing S. 3rd Street that was converted into offices several years ago, but has been mostly vacant since the economic downturn and is now slated to become a hotel.

"I think it's absolutely very intriguing," said Jim Montez, senior director of Cushman & Wakefield/NorthMarq. "That's a building that has wanted for so long to be something more than it has been able to be."

The block is in the shadow of the new Wells Fargo towers, a new $1 billion Vikings stadium, hundreds of new apartments and a high-rise hotel with nearly 1,000 parking spaces.

During a recent visit to the block, George Sherman said that, with an estimated $3 billion in construction happening in the area, Minneapolis is among the nation's most active cities.

His company is headquartered on the block in the 233 Park Avenue building, best known as the home of the Old Spaghetti Factory restaurant, which is expected to remain in the building.

Extending the skyway into Downtown East and the central business district will help provide easier access to those who live and work in the Mill District, a burgeoning neighborhood sandwiched between Washington Avenue and the Mississippi River.

Nick Cichowicz, a Downtown East resident who is chairman of the Downtown Minneapolis Neighborhood Association, applauds Sherman's efforts to add more living options and to extend access to the skyway.

"I really like having a prominent entrance to the skyway," he said. "And having a better connection from the riverfront to the skyway is something the board has been interested in doing."

That area has been in the midst of its own building boom, especially housing. Earlier this week, Sherman announced plans to build a 123-unit luxury apartment building called the Encore at the corner of S. 2nd Street and 11th Avenue.

Housing advocates have been increasingly vocal about the lack of new rental housing that's affordable to working-class families. Kuechle said that while the apartments in this project aren't income restricted, they will be considered "affordable luxury" apartments that will rent for about $2 per square foot, which is less than the going rate in many of the luxury high-rise buildings being built nearby.

Across the city, 2,073 apartments are under construction and another 2,000 are in the planning stages, according to Mary Bujold of Maxfield Research.

The Thresher Square project has moved beyond the conceptual stage on several levels. Sherman has received an approved-concept memo from the U.S. Department of Housing and Urban Development for the apartments, and Sherman has come to agreement with Investors Real Estate Trust, a North Dakota-based company that owns the Thresher Square building, on a joint venture.

And an application for historic tax credits to help finance conversion of the Thresher building has been made to the National Park Service. Sherman already owns the newer two-story Grainger Building (which will be demolished), the surface parking lot and the 233 Park building.

And Sherman has had preliminary conversations with the city and will have final design meetings with neighborhood groups over the summer with hopes of beginning construction next spring. Conversations also are underway with national retailers and hotel operators.

"I think this will help fill in some of the gaps in the area," said Kuechle. "With great service-oriented retail and another housing option. "

Jim Buchta • 612-673-7376