The Rand Tower, a historic office building in the heart of downtown Minneapolis, has changed hands in an off-market transaction that closed about two weeks ago.
A joint venture formed by Hempel Properties and Alex Brown Realty Inc. paid $10.2 million for the 26-story building at 527 Marquette Av. S., $1 million less than the price paid in 2004 by Gaughan Companies of Forest Lake.
Rufus Rand, a World War I aviator who was part of the family that owned Minnegasco, built his namesake tower in 1929 in a distinctive art deco style that has earned it a spot on the National Register of Historic Places.
Jon Hempel said his firm will manage the building and plans to move its offices there from Maple Grove. Hempel's firm has a controlling interest in two other buildings close to the Rand: the Soo Line Building at 501 Marquette Av. S. and the recently opened Hotel Minneapolis in the former Midland Bank Building at 215 S. 4th St. Hempel plans to redevelop the Soo Line Building into a hotel.
The 194,316-square-foot Rand, which is 75 percent occupied, will remain an office building, Hempel said. The new owners plan to invest about $2 million in improvements.
Tenants include small law firms, financial service businesses and professional organizations.
Sales of downtown office properties also have dropped substantially in the last year, partly because of tighter credit markets that have made it harder to finance deals.
After falling for three years, the occupancy rate has flattened out at about 85 percent, according to NorthMarq, a Bloomington-based real estate services firm. The last year also has seen an uptick of subleases, an indicator that some tenants are vacating or reducing office space.
