Dayton's Project developer asks judge to block auction
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The Dayton's Project still hasn't opened to the public. Image courtesy of The Dayton's Project
A pair of New York companies are battling for control of the iconic former Dayton's department store in downtown Minneapolis, and it could all come to a head next month.
What's new: Monarch Alternative Capital is attempting to auction developer 601W Cos.' controlling stake in the massive Nicollet Mall building, tentatively on Aug. 23.
- Monarch, which bought a $78 million loan on the building during the pandemic, said in court filings that 601W has not met benchmarks for leasing the space.
- 601W said that meeting the benchmarks has been impossible due to COVID, and the developer is asking a Hennepin County judge to block the auction, according to the Minneapolis/St. Paul Business Journal.
Catch up quick: 601W bought the department store in 2017 and completed a $300 million-plus renovation that turned the upper floors into offices and the lower floors into retail space.
- It's been complete since February 2020, but remains 98% vacant, with just accounting firm Ernst & Young signing a lease. A planned food hall hasn't opened, either.
- But, 601W said in court filings that they are current on loan payments.
What they're saying: City officials including Lisa Goodman (Ward 7) are backing 601W Cos. in legal proceedings. She told the Star Tribune that the developer has done an incredible job on the project.
The other side: A downtown real estate source told Nick that if someone buys the building at a steep discount, it could be a boon for downtown Minneapolis as it tries to lure tenants back after the pandemic.
- Acquiring the building on the cheap would allow the new owner to lower rents and be more competitive with other office buildings, both downtown and beyond. It could bring more companies in from the suburbs or even outside of the metro.
- A new owner could also bring down asking rents for retailers and restaurants.
What's ahead: Monarch is expected to respond to 601W's request to block the auction this week, according to the Biz Journal.