by William Morris
Finance and Commerce
Hempel Cos. has long specialized in redevelopment projects, but the developer is jumping into multifamily construction on a site next to the Thrivent Financial headquarters in downtown Minneapolis.
The Minneapolis-based developer, known for projects such as the 2017 conversion of a former St. Paul Macy’s store into the Treasure Island Center, and its partners broke ground Thursday on the project in the western quadrant of South Sixth Street and Fifth Avenue South.
The property has been a surface parking lot for Thrivent, which sold the 1.23-acre lot to the developers on June 5 for $4.5 million, according to a certificate of real estate value made public June 6.
The eight-story apartment project will include 122 apartments plus a guest room, a 773-stall parking ramp, and skyway connections to Thrivent’s current headquarters and its future headquarters planned on the other side of Fifth Avenue.
Hempel President and CEO Josh Krsnak said the company sought out partners with expertise in apartment construction and parking to make its first foray into ground-up apartment development. Minneapolis-based Reuter Walton, a prolific builder of multifamily housing, and Milwaukee-based Interstate Parking are partners in the development. Reuter Walton is also serving as general contractor.
Krsnak said Reuter Walton was an obvious choice to help bring the project to fruition.
“Everything we do is rehabilitation, [and] we wanted to bring in a very sophisticated and experienced apartment co-developer,” he said. “We met with Nick Walton, who has done 20 apartment buildings in the last several years. Between his expertise as an owner as well as expertise as a contractor, we thought he was a great fit.”
Reuter Walton did not return messages Monday seeking comment.
The $50 million project has grown through several iterations, from 77 apartments and then 107 units to now 122. Apartments will range from studios to two-bedrooms, but primarily studios and one-bedroom units. Rents will likely range from about $1,450 to somewhere less than $2,500, Krsnak said.
Although Hempel currently manages 18 other apartment buildings, the new complex will be managed by Reuter Walton or a third party, he said. Interstate Parking will handle day-to-day operations for the ramp.
Thrivent is selling its current headquarters to Hennepin County and plans to build a new 350,000-square-foot headquarters on another surface parking lot south of Fifth Avenue. Minneapolis-based Sherman Associates is also planning a hotel, apartments and day-care/fitness center for that block.
Overall, more than 800 parking stalls will be removed soon in the area, which Hempel and its partners hope will make the new parking ramp a hot commodity.
“We’re adding more square footage and only replacing those 800 lots with our 773,” Krsnak said. “That supply-and-demand rule came into play here. That’s why we said this would be a good long-term hold for us.”
The new parking ramp is a high priority for Thrivent as well. Kirsten Spreck, Thrivent’s vice president of corporate real estate, said in an email the company sees the project as complementary to its future headquarters.
“Ensuring our employees who drive to work downtown have adequate access to parking is an important component of the development of our new corporate center,” she said. “We look forward to contributing to the ongoing transformation of East Town.”
The new skyway connections, which promise to finally connect the skyway network through to the Hennepin County Medical Center, are another selling point, Krsnak said. The building will offer two skyway retail spaces totaling 3,100 square feet.
“We designed this building to have mostly studios and one-bedrooms, which we thought would play really well to the younger generation’s working class, and to be skyway-connected and yet have the amenities of the other Class A towers that have gone up downtown,” he said. “We thought we were meeting a need that hasn’t fully been met.”