Jim Graves knows swank. Over the years he's developed and managed hundreds of four-star hotel rooms across the country. Today, he's betting on a different kind of luxury real estate: seven-figure condos.
Graves developed De La Pointe, a boutique condo building near Bde Maka Ska, formerly known as Lake Calhoun, where all nine units will fetch more than $1 million apiece. He expects the project to appeal to empty nesters like him and his wife — who kept the sprawling penthouse for themselves — who want an urban lifestyle but don't want to live downtown.
"There's a pretty strong baby boomer market coming to an age where they don't want the big house anymore," he said. "But I don't know the depth of the market."
De La Pointe is just one of four new projects in Minneapolis that will bring about 180 new condos priced in excess of $1 million to one of the most rarefied real estate markets in the metro. Just a decade ago there were only 186 condos, most of them built before the recession, worth more than $1 million across the entire 13-county metro, according to an analysis of property records by Zillow.com. Today, that figure has more than tripled.
The recent influx of new seven-figure units will test a market driven by baby boomers, transferees and current condo owners who are ready to upgrade. Sales agents say the timing couldn't be better — condo construction has been virtually dormant for more than a decade, emboldening developers who say there's pent-up demand for high-end condos with features that weren't built during the latest boom.
While those agents who are marketing those projects are touting dog spas, lap pools and heated terraces the size of most living rooms, there are doubters. Bob Lux, a longtime Twin Cities developer, pulled the plug this summer on plans to build a condo tower with more than 200 units overlooking St. Anthony Falls.
Litigation over the height and density of the tower delayed the project for more than a year. By that point, he would have been competing directly with a 118-unit luxury tower across the river that's now under construction, Eleven on the River. Ultimately, he decided it wasn't prudent to proceed.
"Someone would have gotten a really bad bloody nose and I didn't want to be a part of that," he said.
At De La Pointe, a five-story building with tall ceilings, wide corridors and a chic wine bar on the main level, Graves said that in addition to his 4,200-square-foot condo, one other unit is under contract. With finished prices that range from $1.9 million to $2.4 million, Graves expects it to take about a year to sell out.
"But we're going after just one little slice of a tiny market," he said. "I wouldn't want to be selling 150 units in this market."
At the Eleven on the River in the Mill District, a handful of units start at $900,000, but many will far exceed the previous record of $7 million for a Minneapolis condo.
John Wanninger of Lakes Sotheby's International Realty, one of three sales agents marketing Eleven on the River, said that with an abundance of Fortune 500 companies in the Twin Cities and demographics in their favor, demand has been "robust."
He said more than half of the units are presold, with most buyers paying cash.
The nearly $190 million project is being developed by Ryan Cos. and Luigi Bernardi of Arcadia LLC. Buyers are getting a preview of the project in a fully furnished and outfitted 5,500-square-foot, $1.5 million sales center that was built in the Ryan headquarters building in Minneapolis.
Wanninger says the market is flush with buyers who already live downtown and are ready to upgrade. He and other agents say it's not unusual for condo owners to gut their units and remodel them, or buy multiple units within a single building and combine them.
"There are plenty of buyers looking for condos at this level," he said, "but no one has executed a project that speaks to those buyers until the Eleven."
The building, which was designed by New York-based Robert A.M. Stern Architects, will have 17 penthouse units that will be more than triple the size of the average home in the Twin Cities.
While seven-figure condos are prevalent in Wayzata, Edina and a handful of inner-ring suburbs, the epicenter of that market is downtown Minneapolis, especially neighborhoods along the Mississippi riverfront. St. Paul has far fewer, mostly in a handful of downtown high-rises and a smattering of condo conversions along Summit Avenue.
The bulk of the buyer pool, agents say, is made up of empty nesters like Lisa Helming, who closed last week on the most expensive condo sale so far this year in Minneapolis. She and her husband paid $2.75 million for 4,133 square feet of raw former warehouse space in what had been the Whitney mill building overlooking St. Anthony Falls.
Helming said that after she and her husband retired in 2017, they moved to an upscale condo in Sarasota, Fla., but kept the house in Eden Prairie where they raised their sons. Ultimately, they decided to move closer to their sons and to "simplify their lives," she said.
When they've finished the build-out of their Mill District condo, which is two units combined, they plan to sell their Florida and Eden Prairie homes.
The listing agent on Helming's condo, Cynthia Froid of Keller Williams Integrity Lakes, said the influx of new condo projects will help open up what has otherwise been a relatively tight market. In recent years, when options were more limited, it wasn't unusual for agents to sell seven-figure units without ever listing them. In 2016, for example, Froid sold a $6.3 million riverfront condo before it ever hit the market, scoring a record $1,500 per square foot.
Froid is in the early stages of marketing the Four Seasons Private Residences, 31 upscale condos that will occupy the uppermost floors of the 34-story RBC Gateway tower, which is about six blocks from the Eleven on the River project.
Developed by United Properties and Four Seasons Hotels and Resorts, the condos will range from 1,500 to 7,500 square feet, and all of them will be priced at well over $1 million. With construction underway, Froid is gathering a priority list.
"I've talked to so many prospective buyers who are very loyal to the Four Seasons brand, and can't wait to be a part of this new concept in Minneapolis," she said.
And just a few blocks from the project in the nearby North Loop neighborhood, marketing is underway for TMBR, a midrise condo building that's being called the tallest wood building in the city. Joe Grunnet of the Downtown Resource Group said that 31 of the 59 units in that project are priced at more than $1 million, including eight that will fetch more than $3 million. "We feel we will hit our goals," he said.
Across the metro, demand for houses priced at more than $1 million has remained relatively constant over the past couple of years. But it's a fickle market: For every multimillion-dollar property that sells within days of hitting the market, there's one that's lingered for years. During October there were 67 sales at more than $1 million, slightly fewer than last year.
Though it remains to be seen how the upper-bracket condo market will fare in the Twin Cities, the region has been more stable than many coastal markets. In New York City, $1 million-plus properties represent more than 10% of the housing stock, according to a recent report from Lending Tree.
That's a figure that's no surprise to Jim Graves, the developer of De La Pointe. He developed a hotel-condo project in Brooklyn where all the units sold for more than $1 million, and he gets the inside scoop from one of his sons, who is a leading real estate agent who specializes in that market.
He said that while there's an obvious difference between incomes — and construction costs — in the Big Apple, he's far less worried about what's happening in the Twin Cities. "The market might be a little more fertile here than in New York," he said. "They're a little frothy."