By: Burl Gilyard
Published: November 8th, 2012
When United Properties bought Ford Center in 2007, the aging building was about 30 percent vacant. But since its top-to-bottom renovation, the 270,000-square-foot office Minneapolis building now has an enviable occupancy rate of 99.5 percent.
“It’s a combination of the cool space, Class A amenities, public transportation and the buzz of the ballpark,” said John Saunders, senior vice president with Bloomington-based United Properties. The building, at 420 Fifth St. N. in the North Loop area of downtown Minneapolis, is directly across the street from Target Field and the Interchange transit hub, which is now under construction.
Technology company Agosto moved into 13,200 square feet of space in the building in October. In December, advertising agency Atomic Playpen will move into 11,800 square feet and Northern Lights Broadcasting will move into 8,400 square feet. In the wake of the new deals, only a 550-square-foot space on the first floor remains vacant.
Brokers are saying that North Loop is increasingly attractive for office tenants.
“It’s getting tighter and tighter because people want to be there. That market is extremely strong and it’s becoming more and more popular,” said Bruce Bahneman, a broker with the St. Louis Park-based C. Chase Company, of the North Loop area.
But at Ford Center, not everything went according to plan. A United Properties affiliate, Ford United LLC, paid $13.5 million for the building in August 2007 — not long before a sharp economic downturn put the brakes on commercial real estate development everywhere.
“The recession slowed us down by a couple of years,” Saunders said. The building was about 70 percent occupied when United Properties acquired Ford Center. At the time the 1913 building housed an eclectic collection of smaller commercial tenants.
Saunders put the budget for the renovation project at more than $40 million.
He said that the renovation began to gain traction in late 2010 when Minneapolis-based HGA Architects and Engineers signed a lease to relocate to Ford Center. Minneapolis-based advertising agency Olson agreed to a deal to move to Ford Center in the spring of 2011. Combined, Olson and HGA occupy 77 percent of the space. Cleaning products company Caldrea is another tenant.
Troy Venjohn, CEO of Atomic Playpen, said that Ford Center is a good fit for his company.
“It’s very cool space and there’s just a lot of energy down there right now with all the renewal that’s going on. It’s close to a lot of other [advertising] agencies in town. It’s a great building and it’s next to light rail,” Venjohn said.
Atomic Playpen currently leases about 13,000 square feet of space in Golden Valley, but Venjohn said that the new space will be more efficient. The company, founded in 1999, currently has 35 to 40 employees.
“It’s going to have a more open feel, a more collaborative work environment,” Venjohn said.
Agosto relocated and expanded from another location, 901 Third St. N., in the North Loop area.
In a prepared statement, Aric Bandy, CEO of Agosto said: “Agosto is focusing our future growth on the Google Enterprise. Our move to a large space in the Ford Center is enabling us to host live training sessions and events to showcase Google Apps and our custom application development capabilities. The building’s location, amenities and style are in keeping with the needs of our growing technology business.”
Statistics from Bloomington-based Cushman & Wakefield/NorthMarq indicate a North Loop office vacancy rate of 16.3 percent at the end of third quarter, compared with an overall office vacancy rate of 16.8 percent for downtown Minneapolis. But with about 1.1 million square feet of office space, the North Loop area accounts for only 4 percent of the more than 26.2 million square feet of multi-tenant office space in downtown Minneapolis.
Jim Montez, a broker Cushman & Wakefield/NorthMarq said that plans call for landing a deli or food vendor for Ford Center’s remaining 550-square-foot vacancy.
“We were very close to making a deal with somebody. … I think we’ll get that solved fairly quickly,” said Montez, who handles leasing of the building with Sonja Dusil.
Northern Lights Broadcasting is the parent of the K-TWIN radio station, which is ultimately owned by the Minneapolis-based Pohlad Family Companies, owner of Minnesota Twins. The privately held Pohlad group is also the owner of the Bloomington-based Marquette Real Estate Group, which includes both Cushman & Wakefield/NorthMarq and United Properties.
In July, United Properties acquired the vacant, 125,000-square-foot office building at 701 Washington Ave. N. in the North Loop. St. Louis Park-based RJM Construction, also part of the Marquette Real Estate Group, will lease about 30,000 square feet of space in the building. The building is being renamed the Loose-Wiles Building, a nod to its history as a production facility for the Loose-Wiles Biscuit Co.
“We really like the North Loop, as do a lot of investors. Our focus right now is getting 701 Washington leased,” Saunders said.