Mortenson Development is giving up on a plan to build a hotel on a narrow strip of land near the Guthrie Theater in downtown Minneapolis.

The company proposed building a 10-story tower with a 235-room Hyatt Centric hotel, offices for the American Academy of Neurology and restaurant or retail space on a piece of land on Washington Avenue called the Guthrie Liner Parcel.

“Mortenson Development has elected not to pursue our proposed development at 800 Washington Avenue South in Minneapolis,” Bob Solfelt, a Mortenson senior vice president, said in a statement. “We have been working through the development process during a rapidly changing investment period and have decided that current market timing is suboptimal for our needs.”

The total project was expected to cost about $49 million, with the property itself priced about $3.8 million. Mortenson had originally said the project was expected to be open before the 2018 Super Bowl in Minneapolis.

After Minneapolis officials approved the sale of the city-owned land to Mortenson last year, the developer requested and was granted several extensions to secure financing for the mixed-use project.

As a consequence of the extensions, for the past few months, Mortenson was supposed to pay the city $8,200 per month, funds that would have been credited against the final purchase price.

With the land purchase and redevelopment falling through, the city is supposed to keep the monthly payments.

Jacob Frey, city councilman for that area of downtown, said the next step is for the city to put out another request for proposals for the property.

“I’m open to affordable [housing] or a component of affordable, open to senior housing, which we need, and I’m open to a commercial office space,” Frey said. “We don’t need another hotel right now.


Twitter: @nicolenorfleet