By Matt Johnson - Finance & Commerce
July 13, 2018
An apartment tower Doran Cos. and CSM Corp. are building at St. Anthony Main may get tall company if they pursue a new master plan concept for the development.
The developers have submitted a set of five potential master plans to the city of Minneapolis for their Expo apartments redevelopment site at 312 Second St. SE and 215 Fifth Ave. SE in the St. Anthony Falls Historic District. Bloomington-based Doran and Minneapolis-based CSM have already broken ground on the first phase of the project, which includes a 25-story tower.
The new master plan concepts will be reviewed by the Minneapolis Planning Commission Committee of the Whole on July 19. The Doran-CSM site is bounded by University Avenue Southeast, Second Street Southeast, Third Avenue Southeast and Fifth Avenue Southeast.
The largest of the master plan options shows a 30-story tower flanked by two 25-story towers in a three-block configuration with two cross streets that connect University and Second avenues. That option also includes three six-story apartment buildings, connected to the bases of the towers, according to documents filed with the city.
A similar configuration shows one of those towers with two six-story apartment buildings at its base, with one of them — at the northeast corner of University Avenue Southeast and Fifth Avenue Southeast — designated as affordable.
Another master plan option calls for building just six-story apartments on two blocks east of the first-phase tower. One more specifies just 12-story buildings.
Doran founder and principal Kelly Doran on Friday declined to comment on the plans.
The option to add more towers to Expo would likely have quite a bit of appeal to potential tenants in the trendy St. Anthony Main neighborhood, said Ted Bickel, a senior vice president with the Twin Cities office of Colliers International. The walkability of the neighborhood and the views of the river and downtown Minneapolis make it worth the expense to build tall, he said.
“In that location you can justify rents that would support a tower,” he said in an interview.
Doran and CSM have already had success with going tall at the Expo site. The partners recently broke ground on the 368-unit Expo apartment project that is part of the master plan site. That $100 million project includes that first-phase luxury apartment tower, as well as low-rise apartments and townhomes.
If the largest plans are implemented, four high-rise towers would stand in a row along University Avenue between Central Avenue and Fifth Avenue. Minneapolis-based Alatus LLC plans to build a 42-story condominium tower at 200 Central Avenue SE, which is adjacent to the Doran-CSM site.
Apartment towers have proliferated throughout downtown Minneapolis and surrounding neighborhoods of late. Alatus is developing a 31-story apartment tower at 228 12th St. S. The most recent entry into the rush to build tall apartment buildings is Sherman Associates, which presented plans for a 22-story apartment building at the southwest corner of Washington and Portland avenues to the Downtown Minneapolis Neighborhood Association this week.
One developer — Lennar Multifamily — recently backed away from a Minneapolis tower project. After completing the 20-story initial phase of its Nordhaus project at 401 First Ave. NE, it chose to build the second phase as a 12-story building. Initial plans had called for a 26-story tower.
Nordhaus is three blocks northwest of the Expo site.
Doran and CSM paid $15.8 million in early 2017 for 8.71 acres at the southeast corner of Second Street Southeast and University Avenue Southeast. The seller was General Mills, and the purchase included the four-story, 66,000-square-foot General Mills Riverside Technical Center. That building will be razed to accommodate the redevelopment.
The partners’ submission to the city does not include an estimate of the number of apartments in each master plan option. In a project description, Doran founder Kelly Doran says the property lies between the University of Minnesota and downtown Minneapolis, where development of up to 800 units per acre is allowed. Current zoning for the property allows for 200 units per acre.
Doran called the Expo redevelopment “transformational” in the letter.
The developers met with city staff members in May and the Marcy-Holmes Neighborhood Association in June to get feedback on the master plan options, according to Doran’s letter.
The introduction of the number of apartments shown in the master plan concepts could come with slow leasing because of the sheer amount of inventory hitting the market, said Colliers’ Bickel. But the units will fully lease in time because the Minneapolis market is still showing “solid leasing velocity.”
The apartment vacancy rate in downtown Minneapolis is 2.5 percent according to the most recent Apartment Trends report from Marquette Advisors. That is down from 2.7 percent a year earlier.