The Fifth Street Towers in downtown Minneapolis have been sold for $154 million, marking the first major real estate sale in the city this year.
Bolstered by some new, attractive neighbors that are raising the profile of downtown's northeast end, the sale reflects a growing tenant demand for the location.
"Clearly that area is going through some significant changes, and that bodes well for future tenant attractions," said Russ Nelson, president of NTH real estate and project management.
The buyer is an entity associated with California-based PIMCO, a global investment firm. The seller, a Texas-based joint venture between Zeller Realty Group and Invesco Real Estate, finalized and filed the sale Friday, according to a certificate of real estate value. Both the buyer and the seller declined to comment.
Built in 1984 and 1988, the two towers stand 25 and 36 stories tall. The towers include more than 1 million square feet of skyway-connected space. A $2 million renovation in 2013 freshened the motif and helped raise the occupancy from 64 to 73 percent.
The selling entity bought the property in 2012 for $111 million in a sheriff's sale. Before that, the last private sale of the property was in 2007 for $186.4 million, according to Hennepin County records. The county values the property at $112.3 million, according to 2014 tax information.
PIMCO is a global giant but relatively unknown in the Minneapolis market, Nelson said, but this market is now attracting buyers who used to not give the city a glance.
"The primary factor in any real estate transaction is the tenant mix and the income stream, the financial parameters," Nelson said. "But then you have to look at the neighborhood and environment around it."
Just across Marquette Avenue is the 26-story Nic on Fifth luxury apartment building that has been heralded as a success. Behind is the new Xcel Energy headquarters and the 30-story 4Marq apartment tower that are under construction. The nearby Ritz Block and the Nicollet Hotel Block, where two hotels stood until the early 1990s, are also facing major redevelopment.
Add the appeal of a light-rail stop less than a block from the Fifth Street Towers, and the formula comes into focus.
"There's no question the neighborhood is going through a resurgence," Nelson said.
A mix of companies fill the Fifth Street Towers, including Stinson Leonard Street, Bowman & Brooke, BBDO Proximity and SportsData.