4Marq Apartments, a slim 31-story tower in downtown Minneapolis, has a new owner: a Washington-based investment firm that's been on a buying spree.
Terms of the sale to Weidner Apartment Homes aren't public, but sources say the firm paid a bit more than $200,000 per unit for the tower, which would put the total sale price only slightly below the building's 2024 estimated market value of $54 million.
"They really feel strongly about the recovery of the city, as did the other bidders," said Abe Appert, the listing broker who facilitated the deal.
Appert said there were nine or 10 offers on the tower, an indication investors are optimistic about the mid- to long-term growth potential for apartment buildings in the city. The sale price was also a value, Appert said, since it was at least $100,000 per unit less than what it cost to build the tower. Today, a comparable tower would cost a minimum of $425,000 per unit to build, he said.
The 261-unit tower built in 2015 is in the heart of downtown's Central Business District between the Mill District and North Loop neighborhoods. It's across the street from another recent Weidner purchase: the Nic on 5th Apartments, which the company bought for $70 million late last year. And in June, the company paid $74 million for the 36-story LPM Apartments tower near Loring Park. The company said it now has more than 6,000 rentals in the Twin Cities, including 3,352 in Minneapolis.
"The Minneapolis market continues to deliver properties that align with our investment goal of buying well-positioned, undervalued but high-quality real estate in markets that represent a long-term target for our expansion due to the anticipated strength of the regional employment and economic forecasts," said Greg Cerbana, a Weidner vice president.
Though considered a luxury tower with all the high-end amenities ― including a rooftop deck and clubroom with wall-to-wall glass doors and 360-degree views of the city skyline — 4Marq tends to fetch rents that are slightly lower some downtown buildings, including the nearby Nic on 5th.
Apartment vacancies in downtown Minneapolis, not including the surrounding North Loop and Mill District, suffered during the early days of the COVID-19 pandemic and were among the highest in the metro. They've come down, however, through the past year. The average vacancy rate downtown was 6.9%, including new buildings still filling, according to first quarter report from Marquette Advisors. That's about two percentage points higher than the metro's vacancy rate.
Rents downtown are on par with Edina and among the highest in the metro, averaging $2,004 per month, which was up slightly from last year. Appert said the occupancy rate at 4Marq was about 97%.
Cerbana said the decision to buy the tower was in part because of the presence of five Fortune 500 Companies headquartered in the Central Business District.
"After a challenging 2020 and 2021, we are beginning to see this group of employers slowly fazing away their work-from-home policies and reintroducing their staff to Downtown Minneapolis, in turn creating strong market momentum," he said in an email. "We believe that continued reinvestment into Downtown Minneapolis, both at a public and private level, will inspire patrons to return to this once vibrant city, causing the overall housing market to flourish."
