New projects point to increased need, availability of mid-range units
Walk anywhere Downtown and you're bound to run into a new condo project under construction.
The onslaught of new housing development begs the question: Will there be a condo glut?
While some real estate observers predict there will be vacant units if too many developments go on the market at once, many are optimistic that the market will bear the recent proliferation. This could be, in part, because some new developments are aiming for a different niche than their more upscale predecessors: namely, $200,000-$400,000 units.
Mark Allen, chief executive officer of the Minneapolis Area Association of Realtors, said the building boom Downtown is not expected to ease up anytime soon. "I don't think we'll get to the point of a condo glut, per se, because by every indication, the [Metro] region is going to grow," Allen said, adding that much of the growth is expected to occur in urban areas. "In terms of Downtown Minneapolis, we fully expect there will be continued development. We're nowhere near the threshold for additional living quarters Downtown."
Currently, there are about 4,000 housing units Downtown with about 2,000 units in the development pipeline.
One of the larger projects recently announced calls for a 1,050-unit development on Southeast Main Street along the Mississippi River at the Pillsbury "A" Mill site.
Minneapolis-based developer Schafer Richardson is behind the project. It calls for transforming the old, hulking white mill and its neighbor, the Red Tile Elevator, into condos. Five additional condo towers would go up next to the old milling structures on Southeast Main Street near the Stone Arch Bridge.
The project has secured approvals from the Marcy-Holmes and Nicollet Island/East Bank neighborhood groups. The developer plans to go before the city in March for approval.
Besides the massive flourmill development, there are plans for a large condo tower in the Hennepin Avenue Entertainment District. Block E hotel developer Jim Graves has eyed a portion of the Skyway Theatre site on the 700 block of Hennepin Avenue South for a 40- to 50-story luxury condo tower.
While the North Loop neighborhood/ Warehouse District area and Downtown riverfront have attracted scores of new condo projects for some time, other Downtown neighborhoods are attracting developers' attention.
"Now developers are starting to see that there's other areas that have been left behind that hold similar potential," Allen said.
Elliot Park in Downtown's southeastern corner has become such a hotspot. A Chicago developer has wooed neighborhood leaders with plans for another Grant Park-style condo tower at the corner of South 10th Street and Portland Avenue. Tandem Developers has secured approval from the neighborhood group, Elliot Park Neighborhood, Inc., for a 26-story project with about 290 owner-occupied units.
The condo tower will have a similar curb appeal to the 27-story Grant Park tower, currently going up at 500 E. Grant St., with plans for townhomes at street level. Grant Park also has about 290 units, 90 percent of which have been sold, according to a Grant Park representative.
The Tandem developers are aiming for the lower end of their neighbor's niche, while the upscale Grant Park condos range from $200,000 to $1 million, Tandem condo tower units will average about $200,000.
Both developers have made an effort to blend in with the neighborhood's signature red brownstones by calling for facades that mimic the surrounding historic buildings.
The buzz in Elliot Park over the Grant Park and Tandem projects has stirred the interest of other developers, who are now looking to buy condo-potential properties in an area formerly known for being almost entirely rental.
Some are opting to rehab the neighborhoods' signature brownstones. For instance, Minneapolis-based Swervo Development Corp. has begun renovations at the Lenox Building, a 110-year-old brownstone that has become blighted over the years. Plans call for 24 flat-style lofts in the 521 S. 9th St. building. According to Swervo owner Ned Abdul, lofts should be ready for residents by fall, and prices will range from $260,000 to $290,000.
Wooing DINKS and nesters
Allen said there are several forces driving the Downtown building boom -- one that is occurring in many regional cities. For one, the size of households is declining across the nation. And more people are looking to live in smaller spaces that require less upkeep.
Others are attracted to the myriad amenities available Downtown: the theater district, sports venues, shopping centers, nightclubs and revitalized riverfront, which now boasts tributes to the city's past with the Mill City Museum and Mill Ruins Park, 704 S. 2nd St.
He also said many people are simply tired of long commutes from the suburbs and want to be within walking distance of their office.
Fran Davis, a sales manager at Coldwell Banker Burnet, the Minneapolis Lakes office, said people of all ages and income levels are looking to move Downtown. Most condo buyers, however, are empty nesters leaving the suburbs and young urban professionals without children (a.k.a. DINKS: dual income, no kids).
The market is tightest for those looking to buy in the $200,000 to $300,000 range, the mid-range such developments, as the Tandem and Swervo projects in Elliot Park aim to fill.
Otherwise, Davis said most buyers and sellers are finding the condo market waters rather comfortable. Sellers still have the upper hand, though, with units posting double-digit gains in prices in one year.