The Penfield, an upscale condominium project that was to be downtown St. Paul's first residential high-rise in more than 20 years, is the latest casualty of the condo market meltdown.
"We have stepped back from the project and will not be doing condos," said Jim Rutzick, a partner in St. Paul-based Sherman Rutzick & Associates, which was developing the 33-story tower with Minneapolis-based Alatus Partners. He said the developers expect to have a new development plan for the site at 100 E. 11th St.
Rutzick said that only about 80 of the project's 313 condo units were presold. Lenders typically have required presales of at least half of planned condo units before construction can proceed. Lending requirements have become even tighter in the past year, after the subprime mortgage meltdown.
The Penfield condos were priced from about $200,000 to more than $1 million.
That market dried up because people have not been able to sell their houses for as much as they would like.
"There's demand out there, but people are still afraid to a certain extent and are now skeptical because of everything they've heard about condos," said Mary Bujold of Maxfield Research Inc., a Minneapolis-based market research company. "There's a group of people out there that will move to the downtowns and will still live in a condo, they're just not doing it right now."
The Penfield condo tower had been designed to incorporate some of the historic St. Paul Public Safety Building on the two-acre site. Planned amenities included a dog-walking deck, DVD screening room and a fitness center and spa.
The developers got rights to the site, owned by the St. Paul Housing and Redevelopment Authority, about three years ago. The city had planned to provide about $9.6 million in tax-increment financing for the $131 million project.
In a video on the project's website, St. Paul Mayor Chris Coleman touts the development as "a tremendous project for the city of St. Paul. ... I think the Penfield is going to be a great place to live," Coleman said. "And as soon as my kids are out of the house, my wife and I are going to be looking to move down there ourselves."
He could not be reached Monday for comment.
The Penfield isn't the first high-profile condo project in downtown St. Paul that failed to meet the presale requirements to start construction. Bujold said in the past year, more than 1,000 planned units were shelved before the marketing phase.
In downtown Minneapolis, 715 condo units were pulled from the market over the past year, including a tower that was planned with about 300 units that is being reconfigured and repositioned as rental. Two projects, totaling about 145 units, are under construction and have yet to come to market. That doesn't include hundreds of units in a proposed project that didn't get built and is now in foreclosure.
And several projects with hundreds of units are in foreclosure.
Bujold said that while she admires the Penfield, she thinks the scale of the project -- and the timing -- worked against it. Several smaller projects in downtown St. Paul still are underway, including the Market Lofts, now on its second developer but moving forward.
"Maybe if [the Penfield] had 100 units it would have been easier to do, but with 300 units it was a little too overwhelming in terms of where this market is right now," Bujold said.
Susan Feyder • 612-673-1723 Jim Buchta • 612-673-7376