Progress Slow: Finding a Balance for Dayton's Renovation

Posted by Kris Lindahl on Thursday, April 4th, 2019 at 4:24pm.

Downtown Minneapolis Dayton Store Renovation UpdateFinding a balance between forward-thinking renovation and historic preservation at the former Dayton's flagship store in downtown Minneapolis hasn't been easy. Now, nearly two years after the store closed and ambitious redevelopment plans were unveiled, progress still seems slow. However, the developer, Chicago-based Telos Group, is unfazed by the delays.

The interior construction that will create a massive interior multi-story atrium is imminent, but so far the work that has been completed is hardly noticeable to anyone passing by. Although the plan was always to retain the historic exterior of the iconic century-old Dayton's store, interior space is due for massive updates. To date, however, the alterations have been largely behind the scenes.

Progress has been steady, according to Brian Whiting, Telos Group president. Even though much of what has been done isn't visible at this point, work is proceeded according to plan, although slower than originally planned.

To date, a major office tenant has yet to be signed. The food court and expected first retail stores will not be opening this summer as once hoped; instead, their debut has been postponed until 2020. Still, the developers are not worried. With a similar big money renovation of downtown Chicago's Old Main Post Office, Telos Group and other members of the Dayton's refurbishment team, point to their ability to weather delays and setbacks. The New York firm at the helm of both renovations, 601 W. Cos, has more than $1 billion allocated for the combined projects.

Ironing Out Conflicting Concerns

Some of the delays are attributed to the demands of historic preservation restrictions in both cities. Another facet of the hard work necessary is simply the amount of effort and oversight involved in transformed huge spaces designed for another purpose into the mixed use vision of investors, architects, builders and developers. Finding the right mix of dramatic open space, retail, office and service uses is complicated. And renovation of any kind is typically fraught unexpected delays.

Cutting through the floors of an existing building while maintaining structural integrity is, understandably, a nail-biting experience. But, at the former downtown Dayton's store, that is the innovative change that comes next. A new multi-story atrium, designed to extend upward from the basement through the building's second floor, is a major design feature of the new space, but it also became a major stumbling block. Approvals from state and federal authorities were slow to be granted.

The former Dayton's store is on the National Register of Historic Places, which qualifies the building for some federal tax credits, but also requires compliance with stringent guidelines. The new atrium, however, will transform the iconic retail space into a modern light-filled office and retail complex, connected by Skywalk to other downtown Minneapolis buildings.

Disagreement centered around the size of the atrium, with preservation officials ruling that planned alterations changed the historic building's character "too significantly," thereby disallowing certain tax credits. An agreement was reached last month, however, when developers agreed to minimize the opening by about 25 percent. Projected costs have risen from original estimates of $190 million to approximately $214 million, according to reports.

Moving Forward Once Again

Now, crews will begin the long-awaited work, and it is time, says Project Director Don Kohlenberger, president of redevelopment consulting firm Hightower Initiatives, to get moving once again. Other familiar parts of the old Dayton's store, including fourth floor Art Deco bathrooms and the roof of the Sky Room Restaurant, will be retained. The developer notes that there is a lot of nostalgia attached to the former retail store, and that future tenants will be allowed the option of determining how some specific spaces will be used. The original auditorium and the former Oak Grill fall into that category. To date, no future uses have been announced.

Although a new timeline is not definitive, the development team plans to showcase the refurbished building's new spaces with Skywalk displays open to the public, and on social media. In addition, a "demonstration space" will occupy approximately 24,000 square feet on the fifth floor, enabling prospective tenants to preview possible finish out ideas. It's all part of the effort to secure new tenants for the building's 92,000 square feet of rentable space that will be available upon completion of the construction. The new display space is expected to be complete by the end of November.

It is also possible that the old Dayton's will not be entirely forgotten, even when the renovation is complete. Developers gained control of the stylized Dayton's trademark, and are reportedly considering some sort of retail outlet at the revitalized mixed-use building, with items that will display the beloved former brand, a unique way to tie the past to the future in downtown Minneapolis. Such renovations of older commercial buildings is happening all over the Minneapolis area, including commercial buildings in Anoka County.

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