Why build offices no one wants to rent? New 22-story condo/hotel complex would surround historic rehab
Plans to wrap a small "boutique" hotel and a 22-story condo tower around the historic Ivy Tower are moving forward.
Real estate investors Jeffrey Laux and Gary Benson, owners of the historic tower at 1115 2nd Ave. S., envision a 124-room hotel and 90-unit condo complex on the block. The rook-shaped Ivy Tower would remain intact and become part of the hotel lobby.
Two years ago, Laux and Benson had proposed a 17- to 21-story office tower on the site, outfitting the Ivy Tower with a "high-tech" conference center. But the slumping office market prompted the investors to shift their focus to housing, Laux said.
"All of the demographics I have analyzed suggested there will be a demand for housing in the Downtown core for the next five to eight years," he said. "It's based on a new and different value system embraced by young professionals and Baby Boomers moving into empty-nester status and looking to relocate."
The project, which has received most of the city approvals it needs, will cost $67 million, which includes $7.5 million in net tax-increment financing proceeds, Laux said.
If final plans are cleared by the city this summer, the investors plan to presell units this fall and break ground in the winter. Construction, which involves extensive preservation efforts (including adding new grouting and historically appropriate windows), is expected to take 18 months to two years, he said.
The condo tower will have 90 units priced between $250,000 and more than $1 million, Laux said. Laux said the hotel room rates have not been set, and he would not give an estimate.
Plans call for two new skyways: one linking the Ivy Tower with a parking ramp to the north across South 2nd Avenue and another one as a southern link to the Convention Center over South 12th Street.
There will also be a park off of 2nd Avenue with street-level access to the skyways, Laux said.
The Ivy Tower will be abutted by a three-story glass atrium to the north. Condo owners and hotel guests will have the option of paying for high-end services, including valet, cleaning service and food delivery.
The refurbished Ivy Tower will also have space for a salon/spa, a small below-grade restaurant in the grotto and other retail.
The Ivy Tower has stood vacant for years. The 1930s-era building first housed administrative offices for the Second Church of Christ Scientists. It has a challenging floor plan; no floor is bigger than 5,000 square feet, dwindling to 1,000 square feet at the top.
Laux and Benson's plans present possible challenges for the Greater Minneapolis Convention and Visitors Bureau (GMCVA), whose officials want a 1,200-room hotel. The Ivy Tower site would be an ideal location for the hotel.
The results of the feasibility study are expected late July.
Greg Ortale, GMCVA president and chief executive officer, said he's not opposed to the condo/hotel plans, but he doesn't want to see city subsidies used for the project.
"The city should not be subsidizing a 120-room hotel," he said. "If the developers want to do all of this without city money, so be it."
Councilmember Lisa Goodman (7th Ward), who represents portions of Downtown west of Hennepin Avenue, said she supports "anything that can be done to preserve and rehab" the Ivy Tower.
She said she's not opposed to a Convention Center hotel if it can be shown the market would support it. She said those who don't own the block shouldn't dictate its use and suggested the hotel could go up somewhere else Downtown, pointing to several empty surface parking lots.
Ortale said he told Laux and Benson three years ago that a 120-room hotel wouldn't add anything to the hotel market Downtown, suggesting instead they look at building a larger hotel.
Meanwhile, Jim Graves, the developer behind Block E's Le Meridien hotel, 601 1st Ave. N., said he has advised Laux and Benson to move forward with a small, "personalized, economical hotel" with room rates around $100 a night -- a hotel that would compete with the Holiday Inn Express, 225 S. 11th St.
Graves, president and chief executive officer of Minneapolis-based Graves Hospitality, said he doesn't see a market for a large hotel catering to Convention Center-goers.
Graves said he doesn't buy the "if you build it, they will come" idea for the Convention Center hotel.
Mayor R.T. Rybak shared similar thoughts.
"First, it has to be demonstrated to me that it would help our convention business and our existing businesses," he said.
"I've been very clear from the beginning that I do not think a convention hotel should be next to the Convention Center," Rybak said. "When people come to Minneapolis for a convention, we want them to see one of the greatest cities in America and spend a lot of money at our businesses -- not [be] locked in the Convention Center and the hotel next door."
As for Laux and Benson's plans, Rybak said: "The Ivy Tower is one of the most distinctive buildings in the city, and we should allow a developer to move forward with an innovative plan to save it.