3 residential towers will replace the data building in downtown Minneapolis

A Twin Cities developer plans to demolish a vacant office building in downtown Minneapolis and replace it with three towers of mostly apartments.

Sherman Associates recently paid $6.4 million for the now-empty Wells Fargo surgery center in downtown Minneapolis.

The company plans to replace it with a 10-story mixed-income mid-rise condominium, 20-plus-story high-rise condominium tower, and a 25-plus-story mixed-use tower that could be hotel, residential and/or residential buildings. or offices.

The $400 million proposal is the Minneapolis-based developer’s fifth and largest project in the city’s Central Business District, which has struggled to bounce back from the loss of office workers during the pandemic.

“We are very excited and optimistic about the direction Minneapolis is heading,” said Sherman President Chris Sherman. “We believe downtown Minneapolis will bring a whole new level of vibrancy and liveability to the people who live, work and enjoy downtown.”

Located at the southwest corner of S. Washington and 3rd Avenues, the 2.43-acre block is now home to only the Wells Fargo Operations Center.

That building, which had three levels of underground space, will be demolished, but Sherman will reuse the foundation walls to build an underground parking garage for nearly 1,000 vehicles.

While many key aspects of the project are still preliminary and subject to community feedback and market forces in the coming months, there is one thing that will not change: the name.

A historical consultant helped uncover the block’s history over the past 160 years, prompting Sherman to name the project “Harmonia.”

The name is a tribute to Harmonia Hall, a Victorian Gothic-style building that stood on part of the site from 1884 to 1962 and was used by the Harmonia Singing Society, an organization formed by the Minneapolis German community that hosts concerts, charitable benefits and cultural events until 1899. The building, which later housed a theater, business college and bank, was demolished in 1962.

The name is also a nod to its physical location in the Central Business District, but close to the Mill District and North Loop neighborhoods.

“To us, it really seemed to fit because it involved creating further harmony for the city and connecting areas and customs where people live, work and play,” Sherman said. “We want this block to really bring a lot of energy and harmony to the city for generations to come.”

Sherman said Harmonia will likely include multifamily, retail and restaurant space, but there is also the potential to include more offices, condominiums or hotel rooms if such space is in demand in the future.

The project, designed by ESG Architecture & Design, also includes a feature restaurant plaza and courtyard.

A few blocks away on Washington Avenue, Sherman is redevelopment of another entire city block, which will include a new fire station, a 22-story competitive rate tower and a six-story, income-limited condominium.

A few blocks away, at the Northstar Center, Sherman is about to convert a 300,000-square-foot office tower into 216 rental properties. The company is also redeveloping what is known as the JI Case Building, which will house the company’s headquarters.

These projects come at a time of relative uncertainty for the city center office market.

While office workers are still trickling into their cubicles and lunch queues are beginning to form outside the skyway restaurants, office vacancy rates in the central business district are still rocking at record highs. And it is expected that as company leases expire, vacancy rates will rise even higher.

Sherman said the goal of these projects is to remove unnecessary office space in the city. The conversion of the Northstar East building into housing and the demolition of the Wells Fargo building, Sherman, will reportedly remove nearly 1 million square feet of redundant and underutilized office space.

The 550,000-square-foot Wells Fargo operations center alone represents about 10% of the vacant office space in the Central Business District, he said.

While there has been lukewarm demand for office space in downtown Minneapolis, housing demand has increased as the pandemic has eased. According to Marquette Advisors, the average vacancy rate in downtown Minneapolis was 8% in the second quarter, despite the addition of several hundred new apartments. At the same time, tenants in the area saw rents rise by 5.8%.

Sherman said he expects to complete construction financing in the next eight months and hopes construction can be completed by early 2026.

“We’re going to have a lot of conversations with the community, the city, with other developers and with potential users,” Sherman said. “Our goal is to have a very defined vision early next year so we can move forward with design at full throttle.”

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