The biggest downtown owner you never heard of

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February 14, 2005 // UPDATED 1:52 pm - April 26, 2007
By: Sarah McKenzie
Sarah McKenzie

Hines, a Houston-based real estate development, investment and management firm, has a significant stake Downtown, with an ownership interest in four marquee properties.

Despite owning an estimated 40 percent of Downtown's "Class A" office space - the Central Business District's premier real estate - Hines might not be a familiar name to those who walk by its towers.

The developer owns interests in the Wells Fargo Center, 90 S. 7th St.; in US Bank Plaza (formerly the Pillsbury Center) and 225 South Sixth and Fifty South Sixth buildings.

Hines is the managing general partner in the properties but not the sole owner. The company does not disclose the ownership breakdown for each building.

William Chopp, vice president of operations for Hines' Minneapolis office, said the developer prefers to remain a quiet owner.

"We've always been silent. We've been behind the scenes. We're a very quiet, conservative firm," Chopp said recently from Hines' Wells Fargo Center office. "We'd rather let our actions, our reputation and credibility speak for itself. We'd rather let the public think that this building is the Wells Fargo building."

Hines has been a Downtown owner since 1978, when it developed the then-Pillsbury Center, named for the tower's anchor tenant.

In 1986, the developer brokered the deal to build the Norwest Tower (now the Wells Fargo Center) at the site of the fire-ravaged Northwestern National Bank Building.

The 57-story skyscraper designed by acclaimed architect Cesar Pelli is considered by many to be the skyline's crown jewel.

"The signature of Hines generally is world-class architecture," Chopp said. "Generally, we'll enter a market and we'll raise the bar. The competition will achieve our level. We bring an ownership perspective - so we're not focused on what today's dollar is, we're focused on the long-term benefit of the asset."

In 1995, Hines acquired US Bank Place (now called 225 South Sixth).

Hines' latest development - Fifty South Sixth, home to the Dorsey and Whitney law firm and the Fallon advertising agency - was built in 2001.

Chopp predicts the next local development cycle for Hines will come in 2012 or 2014. The viability of new construction will depend on various factors, such as office vacancy rates, major Downtown tenants' lease status and site availability, he said.

"Our strategy has been, in the down economy, we may not get the higher rents of the competitors, but we're generally going to be the first ones to lease because tenants want the greatest value," Chopp said. "The investment is made at the upfront because we're an investor. We understand the value of the dollar long-term."

Besides investing in its signature skyscrapers, Hines has worked with the Greater Minneapolis Building Owners and Management Association (BOMA) and the Downtown Council on many initiatives, including SafeZone Cameras, streetscaping projects and creating a Downtown Special Services District, in which property owners would pay higher taxes for additional city services.

Hines also aggressively pushed for a reduction in commercial real estate taxes - one of a series of state tax law changes in 2001.

"We're more in a supportive role and a consensus-building role," Chopp said.

BOMA Executive Director Kent Warden agreed with Chopp's description of Hines' role.

"I think the city is really lucky to have a developer and owner of that caliber. They do really take the long-term view of real estate development and ownership, so they build quality and they'll pay extra for high-quality architectural features," Warden said.

Warden said Hines fosters a close relationship with its tenants, keeps the properties in "top-notch condition" and is active in the Downtown business community.

"They try to work through other organizations and just try to be good corporate citizens," Warden said. "It shows that they care about the overall quality of Downtown beyond just the perimeter of their own buildings."

While Hines weighs in on local and state issues through organizations, the firm does not have lobbyists on the payroll, Chopp said.

Minneapolis Mayor R.T. Rybak said Hines is quick to partner with city leaders on projects, both large and small.

"They've been a good partner on big issues like exploring a Special Services District and smaller issues like planting the medians on 3rd Avenue," Rybak said. "I've never been lobbied by them, but they've been there when we've asked."

Rybak has tracked Downtown ownership through a variety of careers - as a reporter, on behalf of the Downtown Council and in his current capacity as mayor.

"In that time, there have been some very high visibility people come in and out of town - some really successful and some not," Rybak said. "Through that whole time, Hines has been extremely professional, low-key and blue chip."

As for its local agenda, Chopp said the firm supports development that adds to Downtown's vitality, including expanding light-rail transit. He also said he'd like to see Minnesota keep its professional sports teams.

Councilmember Lisa Goodman (7th Ward) credited Hines with leading the business community's effort on the 3rd Avenue

South median landscaping project, in conjunction with her office.

"I have found Hines to be a quiet but significant force in the Minneapolis market," Goodman said. "Not only did they adopt, design, plant and maintain one of the most beautiful medians on 3rd Avenue, they were a resource for all the other teams - they led the private sector effort."

Goodman also lauded Hines for attracting businesses to their Downtown towers despite the weak economy. She noted that Fifty South Sixth transformed the corner that used to be a hangout for customers of a nearby liquor store.

"[When] many were asking for public funding and financing to build Downtown, Hines took the leap of faith and made a good deal great, adding to the vitality and tax base of Minneapolis," Goodman said. "I have great respect for their leadership ... and have been impressed with their commitment to our city."