The former Crowne Plaza Hotel in downtown Minneapolis will become a Hotel Indigo boutique hotel.
The sale of the Crowne Plaza, which closed at the start of the coronavirus pandemic in 2020 amid travel restrictions and stay-at-home orders, was finalized Wednesday for an undisclosed price, said John Kothe, of Kothe Real Estate Partners in Madison, Wis.
Kothe is leading a $25 million renovation, redeveloping the 1962 building in partnership with Madison-based Great Lakes Management Group and New York-based KP Property Development.
Work will begin next month, with the new hotel and restaurant opening in fall 2022, officials said.
Rehabbing the old Crowne Plaza will be the first Minneapolis project for the developers.
While the pandemic has badly battered Minnesota's lodging industry, "we think the timing in the fourth quarter of 2022 is appropriate ... and will be good for us," Kothe said. "The economy keeps getting better as people continue to go back to work and events downtown."
Once completed, the property at 618 2nd Av. S. will become a 218-room Hotel Indigo by IHG.
"The investment and upgrading of this property, and the new owner's confidence about the continued recovery of the downtown economy over the next year, is a welcome and encouraging sign as we close out 2021," said Minneapolis Downtown Council CEO Steve Cramer.
Carpets and other soft construction will begin next month, followed by $800,000 worth of asbestos removal, provided a grant is approved by the Metropolitan Council as expected. Separately, escalators will be removed to restore a 40-foot-tall rotunda that was covered over decades ago.
Furniture, lights, beds and other contents from the former Crowne Plaza are being liquidated in four online K-BID.com auctions that end this weekend, said Alex Haigh, owner of Minneapolis-based Nordeast Resale.
"They are just changing ownership and wanted to update everything, so they are getting rid of all the old inventory," Haigh said. "With the whole COVID thing, hotels started to struggle so we have [liquidated assets] for quite a few."
The Hotel Indigo project took a long time to cobble together.
"We have been working on this for three years. And we are excited. We love to breathe new life into old buildings," said Kothe, who has co-developed several commercial properties including Hotel Indigo properties in Madison, Wis., and Kansas City, Mo.
Twain Financial, Lincoln Savings Bank and U.S. Bank are financing the Minneapolis project.
New York-based Taconic Capital bought the Crowne Plaza Hotel and the adjacent Northstar Center office and parking buildings in 2018 for just under $63 million.
Taconic was arranging to sell the hotel to Great Lakes Management, Kevin Page of KP Property and the Kothe partners in 2019.
"When COVID hit, we really just kind of pulled out and continued to focus on our other properties," Kothe said.
Meanwhile, Taconic kept working on the project. It subdivided the hotel from the Northstar Center's 1,000-spot parking parcel and from its west and the east office towers. It also applied for the historic-property tax credit needed for the hotel sale.
Kothe, Great Lakes and KP Property Development then re-engaged with Taconic about nine months ago to purchase the hotel and finalize design plans.
Chicago-based Level Construction will be the hotel general contractor, working with Minneapolis-based RSP Architects.