Block E owner McCaffery seeks to expand Downtown holdings

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December 3, 2002 // UPDATED 1:34 pm - April 30, 2007
By: Ellen Nigon and Kevin Featherly
Ellen Nigon and Kevin Featherly

However, neighborhood group opposes restaurant/ housing plan for Pantages site

McCaffery Interests, Block E's developer, may extend its Downtown holdings. Owner Dan McCaffery has made a proposal to develop the Stimson building, which sits next to Block E and surrounds the Pantages Theatre at 7th Street and Hennepin Avenue.

McCaffery's proposal would install a high-end restaurant on the Stimson's first floor, with eight to 11 live/work lofts on the second floor.

However, the Downtown Minneapolis Neighborhood Association, which often acts as an advisory board to the City Council, voted unanimously to oppose McCaffery's proposal on Dec. 10.

Board members agreed that the Stimson could use a restaurant, but expressed concerns that McCaffery would install a chain restaurant such as Applebee's or Red Lobster. Block E, 600 Hennepin Avenue, is populated with several national chains.

A chain restaurant such as Applebee's "does not create a unique experience," said DMNA board member Tom Hoch.

Hoch is the head of the Historic Theatre Group, which manages Hennepin theaters, including the State, Orpheum and Pantages. Hoch said any Stimson development needs to have "some sort of synergy" with the Pantages. Hoch's group had an exclusive option to develop the Stimson until mid-2001.

The Minneapolis Community Development Agency, which has owned the Stimson since 1999, recommended that DMNA approve McCaffery's proposal.

According to MCDA senior project coordinator George Kissinger, McCaffery was the only developer who responded to the agency's August request for proposals. An earlier RFP produced no proposals.

Kissinger noted that the City Council terminated Hoch's group's development rights when it failed to redevelop the Stimson.

"[The Historic Theatre Group] was unable to put anything together there and get leases and financing," Kissinger said. "We needed to go forward with the building."

Dan McCaffery responded to DMNA's chain-restaurant concern, telling the group, "Local restaurateurs of high quality would each be solicited to view the space."

He said restaurants similar to the Cheesecake Factory or P.F. Chang's would also be sought out.

McCaffery said, "There are clearly some meaningful issues that we should address with the neighborhood association and others in interest."

Housing and groceries

McCaffery, who said he is building a major Washington, D.C.-area residential complex, has indicated he may do similar work in Minneapolis. The Stimson building would be his first experiment.

It's all part of what McCaffery describes as an inexorable trend. He predicts much of the vacant office space Downtown -- possibly even including places like the Foshay and Dain towers, 821 Marquette Ave. and 60 S. 6th St. -- could be converted to market-rate housing.

"It's just like what happened in New York," he said. "The old buildings, it becomes too difficult to keep up to modern-day office standards, so you turn them into homes."

But, he added, that poses a chicken-and-egg problem. For Downtown to become a thriving community, there must be amenities such as drug stores and grocery stores. McCaffery drew attention recently when he told the Star Tribune that a grocery store might fill out Block E.

Councilmember Lisa Goodman (7th Ward) has fought for years to see a grocery store built near Harmon Place in the soon-to-be-abandoned Billy Graham International headquarters, 1300 Harmon Place.

But that dream evaporated when the state Supreme Court ruled against the city's historic designation of the area, allowing Graham possibly to demolish the historic building and sell the land at prices too high for a grocer.

Goodman said Block E would be a poor place for Downtown residents, since most live near the riverfront or around Loring Park. However, she said, given a choice of no grocery store, or a Block E grocery store she would opt for the latter.

Goodman also suggested the point may be moot.

"I am becoming increasingly cynical about the ability to have a standalone grocery store Downtown without a large public subsidy," she said, since subsidies are not likely. "And land prices don't go down as the days go on. Land prices go up."

McCaffery chafes at such talk, saying he has not found tenants for Block E's remaining vacant spaces. He said either a drug-store or grocery store, or some combination of those could work.

"It's just too early to talk about it," he said. "We have a few strategies in place. Our strategy involves combinations and permutations of any of those uses."

He disagrees with Goodman on one central point, saying that a Downtown grocery store -- with or without public subsidies -- will be built once office spaces are converted to residences.

Despite his Stimson proposal, McCaffery said he is not thinking of developing a larger residential community near Block E to support a Downtown grocery or drugstore. However, for a residential community to really thrive Downtown, groceries, drugs and other everyday commodities and services must become available, he said.

"Groceries and drugs and papers and books and movies -- each one of those things is an arrow in the quiver of a community," McCaffery said. "And a community isn't going to be there until, some day, all of those things show up."