What used to be surface parking in downtown Minneapolis has virtually disappeared, transformed into new condos, apartments and offices, according to a recent report on available development tracts in the heart of the city.
More than 63 acres of undeveloped land existed in the downtown core a dozen years ago, according to a recent Business Journal survey. Today, after a decade-long building boom, less than 20 acres remain undeveloped, and the word is some of the landowners are simply not interested in selling.
Whether that's good news or worrisome depends on which side of the development table one sits.
Actual versus Potential
The apartment and condo market has been particularly strong in downtown Minneapolis in recent years. The trend continues, and the luxury condo market appears to be especially exciting right now. However, newer office space absorption seems to be slowing somewhat due to changing needs for business space. The timeline for major redevelopment projects, including high-profile plans, have been delayed, as the former Macy's renovation is behind the original schedule for completion. New tenants are seemingly more difficult to lock in.
But none of the negatives seem to have affected the potential for future growth and development of the city's downtown area. In fact, continuing interest and activity in the urban core seems stronger than ever before.
What's Underway and What's Possible?
Currently, more than seven acres of formerly open space is earmarked for new projects. But, of the tracts not currently under active development consideration, the breakdown is more difficult to categorize.
Available property exists primarily along Hennepin Ave. in Hennepin County and in the eastern portion of downtown Minneapolis. Only two tracts are still available in the Skyway area: one is just over eight-tenths of an acre; the second of approximately two acres occupies almost a city block in a prime area near the Campbell Mirthun Tower. The owner notes office development is the sensible target for that tract, but it's currently difficult without a potential tenant in place prior to development.
Baker Investments Ltd. owns another tract at Hennepin and Fifth St., and notes the same concerns, even though they are interested in the possibility of a joint venture or a direct sale to a developer. In the past, the firm has toyed with development options, but found none to be viable at the time.
Baker, notably, sees the value of turning current surface parking lots into higher-use developments, adding the economic return from the parking business is "good, but not great," and a better use would be multi-family housing, based on the service, maintenance and property tax dollars currently spent on the land.
Future Teardowns Envisioned
Other local real estate observers, and some developers, see a resurgence of teardown activity, which will help transform downtown Minneapolis into the higher-density environment some city planners view as necessary. There is no doubt the dynamics of downtown development are changing. Some buildings ripe for redevelopment are currently government-owned, and they may be first on the list of "new use" targets.
Both city and county officials are involved in efforts to streamline their departments by moving operations to newer, more efficient locations. Low-rise buildings, which have been able to accommodate relatively few employees, will give way to new ground available for development as the consolidation of the work force occurs.
As just one example, Hennepin County's current Family Justice Center is expected to be offered for sale in 2020 or 2021, according to a county spokeswoman. The City of Lakes complex currently occupied by the city is expected to be left empty when employees move into a new building currently under construction near City Hall. The city will reportedly open a Request for Proposals this fall on the three buildings occupying a 1.6-acre tract at Third Ave. and Fourth St.
No matter how one views it, the changes occurring in Minneapolis are interesting. Some of the current owners of surface parking lots say they have no interest in selling. A one-acre lot on the University of St. Thomas campus falls into this category. On the other hand, other owners, including the First Baptist Church of Minneapolis (who holds title to a slightly larger than one-acre tract), have entertained several offers, which have not progressed past initial conversations.
As land becomes even more scarce, it will surely become more valuable on the open market. What occurs after might be anybody's guess. At this point, only one thing is certain: Minneapolis is in the enviable position of having a vibrant downtown development boom, and it seemingly is poised to continue - at least for the foreseeable position.