Downtown Minneapolis Office Market

[kirby96]

I am skeptical of all of this development talk for a variety of reasons, including, but not exclusively:

-the city has *NEVER* experienced a development boom like the kind that is being suggested -- residential and/or office
-there are plenty of local corporations with space needs, but few of them could or would bolster a super-tall, and one who would is taking the "urban campus" route (i.e. Wells)
-the office market nationally is still quite soft, and locally it's even softer, especially as a region. Building more space right now without tenants lined out the door would be foolish and go against the grain of how people typically do business in Mpls: conservatively
-one word: "NIMBYs" (this WILL be an issue if something breaches the "big three", even if it's zoned appropriately)
-I personally don't know of any major out-state or international clients who would consider occupying a large bulk of office space here in the Twin Cities, and even if there were to be any I'd expect baby steps
-nationally/globally we are still in a stagnant econony with bleak growth projections and in the face of imminent rising interest rates. The cost of doing business -- which is already expensive and high barrier to entry -- is going to only get tougher with each passing week.

Precisely. I have no doubt that Retiredbanker is telling us what he is seeing, and that these projects are in fact moving ahead, but my guess is there is a pretty clear line on actually pulling the trigger on any of them. As others have said, the Minneapolis market isn't big enough to allow much room for error on projects like this. You gotta be pretty darn certain that things are gonna fall into place (tenants, financing, etc.). Retiredbanker says so in his comments. In my opinion, in order to actually get that level of certainy, a developer would need to see an economic environment like those that existed when we saw previous growth in office skyscrapers (mid 80's, and mid to late 90's). Basically, an outlook bullish enough that people at least expect expansion to occur for several years. I don't think we are anywhere near that level of confidence in the economy.

[Nathan]

I think an important thing to consider is that we haven't had any significant building in the Office arena for quite some time, and a building at this scale is going to take a considerable amount of time to build even AFTER all of the paper work is done and they start putting the hole in the ground. I mean if they proposed it today, it wouldn't be complete for a tenant until when 2018 or later? If the current trends of residential growth continue, and some companies follow after, It's not unreasonable to think that we could fill that kind of office space in the next 5-10 years... They obviously have to do a lot of predicting. I don't know too much about these specifics, and the questions y'all are posing as doubts, but based on the way Minneapolis has a history of building tall and then catching up, and having some of the tallest buildings west of the Mississippi, it's about time they get talking and put something out there. It would be nice to play on the global scale of buildings again, especially after all of the infill and things going on recently. Why not have the height and the street presence of a great city.

[Chef]

Most of our skyline was built between 1987 and 2000 so it isn't like we haven't had a big sustained boom before. In the '90s it seemed like there were major towers going up all the time. You guys have forgotten what prosperity looks like.

[kirby96]

Most of our skyline was built between 1987 and 2000 so it isn't like we haven't had a big sustained boom before. In the '90s it seemed like there were major towers going up all the time. You guys have forgotten what prosperity looks like.

But that's the point. Late 80's was characterized by a stock market boom. People felt rich. The economy was expanding. Think "Wall Street" the movie. Mid to late 90's, dot-com/internet boom. Again, people felt rich. Right now, the anemic economic recovery doesn't have people feeling rich. We've forgotten what properity looks like because we don't feel prosperous. When we don't feel prosperous, we don't engage in hugely expensive speculative projects with uncertain outlooks. Most people don't envision a boom like those times anytime soon. That's why job growth isn't coming back. It's certainly possible we see an economic boom (few people saw the internet boom coming, for example), but if no one thinks a boom is going to happen, I think it is unlikely someone is gonna embark on a massive project like this. They might plan it, and if a rock-solid major tenant comes through, perhaps they will proceed, but I think that level of certainty is unlikely in the current environment.

[lordmoke]

On the other hand though, materials, design, and labor are much cheaper during a weak economy. If companies can see better times ahead, they'll want to jump on this while it's affordable.

[min-chi-cbus]

-one word: "NIMBYs" (this WILL be an issue if something breaches the "big three", even if it's zoned appropriately)

No. This is not a real issue.

Oh? I personally doubt that, but I'd be glad if you're right.

[min-chi-cbus]

On the other hand though, materials, design, and labor are much cheaper during a weak economy. If companies can see better times ahead, they'll want to jump on this while it's affordable.

But I don't think any of those things are cheap at all right now, and they'll only get more expensive as time goes on.

[Nick]

It could be said that I've had firm plans to get a cat "pretty soon" since about mid-2010. We're nearing the end of 2013, but alas, I have no cat.

[MNdible]

Sounds to me like Nick's cat procurement is imminent.

[Nick]

There's a lot going on behind the scenes...I went and got a lot of stuff (litter box, toys, etc.) a while ago so I'd be ready when market conditions are just right. Soon.

[FISHMANPET]

Don't make me spam you with adorable adoptable cats.

[mattaudio]

Will it be named Woonerf or Supertall?

[Nathan]

What's cool is, there are multiple Nicks, there is a reason some cat's get adopted and some get put to sleep.

[Gman12]

I just don't see where the demand would come from for a new supertall. 1+ million square feet already proposed by the Vikings stadium and Target keeps moving thousands to the suburbs along with a large number of companies already being on 394 and 494. I don't really see many of them moving dtown if they are already in their relatively new and cheaper buildings.

[min-chi-cbus]

Maybe if UnitedHealth Group upends themselves from Minnetonka/Eden Prairie and comes downtown......THEN we'd have the type of demand along with supply constraints needed to justify a supertall (or two)!

[Nick]

Cat humor aside, the reason this is funny is as follows:

I, with no supposed "insider" knowledge of anything, can also tell you that there are "lots of big things" in the works for Downtown Minneapolis, because of course there are lots of big things in the works for Downtown Minneapolis. We're a fairly well-off city with lots of redeeming qualities and many expanding companies. Of course there are lots of people planning lots of things.

However, I can also guarantee you that the Pentagon has a fully-fleshed out plan to defend the United States from an attack from Canada--because that's what planners do all day. They make plans, regardless of circumstances.

It's just silly to see the same posts over the past, I dunno, eight years or so, of this group of people promising "big things just around the corner" and so far none of these hypothetical insiders have really nailed anything particularly well. For what it's worth (and not that it's a competition) I'll point out that my "thing I heard somewhere:thing that turned out to be a thing" ratio is 1:1 at the moment.

[FISHMANPET]

Invasion of Canada you say?

[retiredbanker]

Something that I need to address that I see (read) that is far too prevalent on this site this past year is the negativity and pessimism, before I give an example of a project nobody (on this site or anywhere) ever knew was planned except on a need-to-know basis. Particularly about development, being more specific, skyscrapers. Developers are not using Lego's here, it's concrete and steel, real money and plenty of it. It takes a very patient person to even take on the task to develop a tower. There are so many factors in designing towers that are never even mentioned on this site. It is mind-boggling to even think that construction is simply a matter of drawing a building, then building it. It is extremely difficult and complex, even to the most experienced of developers and financiers.

I also need to address what Nick posted, "It's just silly to see the same posts over the past, I dunno, eight years or so, of this group of people promising "big things just around the corner" and so far none of these hypothetical insiders have really nailed anything particularly well." I, for one, am taken back and insulted by such a statement, at least if you're addressing that to me. I have only been on this message board for 15 months, Minnescraper for maybe a year. In that time, there was a neverending parade of doubters about the Magellan project, I disclosed what I felt comfortable with stating, added a few more posts to calm and provide confidence to those who continued to lose hope. I provided the exact date to which the "basic structure" of the financing was completed and the approximate time it would take for Magellan to make the announcement to finalize the financing. Well, 1368 LaSalle is under-construction. Same with the The Nic, I posted what I had discussed with an Executive at Opus concerning the demolition, clearing of site and actual construction timetable. It was within 2 weeks of what the executive had told me. There still were doubters The Nic was going to be built. Well, The Nic is well under-construction. I've been in the finance business far too long to have me addressed in such a manner.

Now, just to provide an example of a recent project that nobody ever even heard a rumor about, that was quietly negotiating to get a lead tenant was the site of the proposed 4Marq tower (another project that nobody knew of, although I was well aware of it.). The original project was to be a 46-story office tower with 395,556 GSA. The 621-ft. tower with a spire that would of reached 700 ft. in height was to be a niche building, designed for its lead tenant. There were 2 reasons why it wasn't built, the lead tenant actually has grander plans with a better a long-term strategy/solution for its space needs, the other reason will remain private. The tower was to be self-financed and profitable from the get-go. I've discussed with developers and other financiers over the years that the media/press is a nuisance, a distraction. Once a project development plans are rock solid, iron-clad, then an announcement can be made, and no sooner. That is perhaps why there are no renderings released or publicity. Once again, it comes down to expectations, a developer doesn't need distractions when putting the project together, otherwise it comes down to ego, where there is never a need for that in business.

[MS3]

Looking back at the development of skyscrapers in Minneapolis, it has been consistent with great additions over the past three and a half decades. Most of our towers came in the 80's and early 90's boom. In 2000 we saw target's tower followed later by the the Carlyle and ivy and almost the 50 story Nicollet which would have happened if it were not for the economic depression. Since then we've added two under construction with another soon to break ground. Plus the Ryan proposal and stadium. Obviously not all of these towers are office, but my point is Minneapolis has been consistently adding towers throughout time and It shouldn't be too surprising to think more will come in the next few years- and quite possibly big (500+) feet. Rumors are rumors yes, and predictions are predictions and demand is demand, But if you mix common sense, and consistency, Minneapolis will get continue to grow and get more towers. If someone on here posts a rumor or repetitious predictions because of insight they have then..cool. Isn't that what this site is about? I like how retired banker emphasis on patience. So with patience, I'm enjoying watching our skyline change and grow and look forward to the next big additions, because Lord willing- it's going to happen.

[zumf]

Hi guys. Have to post a few of my thoughts here. Bear with me, please.

First, I came across this site by accident after finding out about the LPM apartments, Nic on Fifth, and Ryan downtown east project. These projects got me real excited. I love architecture and urban planning, even though I work in medical and am an electronics tech. I got that from my father and his buddies in urban planning at a university. So, as I said, these projects really caught my eye and I wanted to find out more. Inevitably, they led me to this website, which has an awesome amount of information on just about everything one could want to know about buildings, transit, and everything else in my adopted home. I am originally from South Dakota.

It helped me discover the North Loop building boom before it appeared in the news. I’ve learned about “stick” buildings versus concrete, etc. Believe me, this website is a powerful tool. Here’s where the problem comes in.

I’m not a developer, and I don’t have a billion dollars, but I do understand a little about marketing. If somebody (say a rich developer), is interested in building here and does a little web searching, they may come across this website. Let’s say this person has x amount of dollars to spend and they are considering three cities: Seattle, Denver, and Minneapolis. They study the other two, hear great things (as they will), and then studying the third they see a thread related to what they are considering spending money on. I.E. downtown office market. They read about some very positive possible developments, but also hear some very troubling negative comments like “boils down to nonsense”, and NIMBY’s will never allow it to happen.

You may or may not mean to cause harm, but those words are now in plain view for all the world to see. Those words might stick in the back of the head of the developer, and that may be all that’s needed to make a choice not to build here. After all, why build in a city where the primary urban planning website thinks it’s impossible to get another grand skyscraper?

After reading the comments by “retiredbanker” about possible development, I was hoping to see comments such as “that’s really cool! Is there any way we can help?”. This website could be used as a powerful marketing tool to show a very engaged community looking towards the future.

Negative comments towards visionary leaders will not help our city grow. I’m not an urban planner, but I found this site. How many developers are reading these posts as well? Words are powerful, especially to those on the fence. Let’s be a little more positive about our community, do a little dreaming, and help our dreams become reality.