If proclamations made with muted, Minnesotan gusto were correlated with economic results, Jacob Frey’s exhortations would have downtown Minneapolis humming along like Dallas.
Alas, they do not. Some of downtown’s signature office towers are ailing financially:
The 30-story LaSalle Plaza in downtown Minneapolis is scheduled to go to auction next week after the previous owner, the Teachers’ Retirement System of the State of Illinois, avoided foreclosure by transferring the building to its lender, Northwest Mutual.
Nearby Fifth Street Towers is facing the same fate and may also go back to its lender this month, according to Axios’ sources who were not authorized to discuss the matter.
And it’s not just your garden-variety class-AAAAA office space. It’s the big daddy of all the downtown office buildings (emphasis added):
Real estate analytics firm Trepp is keeping tabs on IDS Center — the city’s most iconic office tower — due to a 77% occupancy rate and the loss of Nordstrom Rack from Crystal Court, said senior managing director Manus Clancy
Rumors of downtown’s non-demise appear to be premature.
So how much of the Minnesota budget surplus is Education Minnesota going to leave on the table? Enough to bail out Minneapolis real estate developers?
But then why should Waseca chip in to bail out Minneapolis, you ask?
Who did Waseca vote for, I say?
I have to go downtown on Monday for a customer meeting at the IDS center. I’ll report back on how deserted it is.
You far right-wing nutjobs will do anything to besmirch all the Good Things happening downtown. Like no mention, nothing about Operation Endeavor. The fact are that data released from the second 28-day cycle of Operation Endeavor, the multijurisdictional campaign to reduce violent crime in Minneapolis, showed improvements from this time in 2021 in terms of gun crimes and robberies, including carjackings.
Not only that, but a nest of racists has been uncovered in the Golden Valley Police Department and officers are leaving. Progress, baby!
Using covid as an excuse for lockdowns terrified voters into absentee ballots which are easier to cheat, so the bad orange man was defeated. Success!
The incidental effect of lockdowns- closed businesses lost jobs and employers discovering they don’t need to pay high buck rent for downtown office space to do computer work that can be done from home- is collateral damage which is entirely worth it price for achieving No Mean Tweets
An Illinois public employee pension taking a hit like that? Good thing that state’s pensions are so well funded in the first place. Hahaha
Annecdotal evidence, but I work in heart of downtown Mpls, 4th ave & 8th Street, both pre and post pandemic. It has definitely changed. Friday’s (during the day) its a ghost town; with probably Mondays having the most people/traffic and rest of the week sporadic. I drive and last snowstorm, I was able to get out of downtown and home (NW Suburb) in about 35 minutes. Unheard of three years ago. The skyway is still littered with closed restaurants, but some survived. Panhandling and loitering has increased a lot. And lastly, a definite reduced police presence down here. Used to see cop cars stopped on a lot of street corners monitoring or driving around patrolling, but on the way out of downtown, I’m lucky if I see one.
^ It might be anecdotal, painteddog, but it’s got an air of authenticity that is lacking in all the other (propaganda) outlets. Thanks.
My daughter went downtown over the weekend for a concert at the Armory. She was amazed at all the drag racing and general lawlessness she saw.
I went down to MIA yesterday AM to view the traveling expedition of Florentine renaissance art. No problem at all, seemed like the usual artsy-fartsy MPLS crowd in attendance. No signs of urban decay spotted, other than a lot of closed, boarded up businesses on Franklin. But then, the area between MIA and UM always was a step up from the surrounding neighborhoods.
reader15 observed: “An Illinois public employee pension taking a hit like that? Good thing that state’s pensions are so well funded in the first place. Hahaha”
That’s what caught my eye too, reader.
The pension fund can afford to just jettison a huge investment like that because they know J. B. “The Gut” Pritzker (do *NOT* check that “Early Life” tab!) will back fill it with taxpayer dollars.
Illinois has eclipsed NE Yankee states as the highest taxed in the failing USA. It’s a test bed to see if there is actually a breaking point.
Don’t forget that commercial/industrial real estate pays property taxes at a rate twice that of average homes. That reduced value takes a while to filter onto the tax rolls. When it does, residents will be picking up not only their share of the tax increase, but also a big chunk that was previously paid by office building tenants.
City & county governments received covid bux from the feds in 20 &2021. That has hidden the decline in the financial picture for Minneapolis & Saint Paul.
The death spiral begins when taxpayers see their rates going up while services go down. Money from the feds & state can only make up for so much.
I have to wonder whether the teachers’ union was very enthused about the building’s LEED certification and advertising of yoga mindfulness and ignored other evidence that the building was not going to be a good investment. Say, like “it’s in the middle of a city with dicey roads and parking, so getting people there is going to be tough.” Then skyrocketing crime told people “just skip it, drive to the suburbs instead.”
It’s worth noting as well that back in 2013, when it was refinanced, the principal was $82 million, which is only about $130/sf, which is pretty low for commercial real estate of any kind, let alone a downtown tower. So the market knew very well that this building was a dog even back then. Loan was for 3.81% interest only, and that means that from the ~400,000 square foot of space that was rented out, they were not able to “net” three million bucks. So either it’s a “repair shop queen” kind of building, or the teachers’ union didn’t pay attention to the fact that the building wasn’t getting good rents, or both.
Hmmmm…..does “LEED” lead to moderation?