Scoop: St. Paul's Landmark Towers to become apartments
Landmark Towers is slated to be converted to apartments under a plan by Minneapolis developer Sherman Associates.
Why it matters: This could be a harbinger for aging office buildings as the rise in remote work reduces the demand for office space across the metro.
Details: The 25-story tower's 213,000 square feet of office space would become 186 apartments under an $80 million plan by Sherman, company president Chris Sherman told Nick.
- But even with the historic tax credits Sherman is applying for, the project still needs additional subsidies if St. Paul's recently passed 3% rent cap isn't tweaked, Sherman said.
- Mayor Melvin Carter has proposed an exemption from rent control for new construction as well as conversions like Landmark.
Between the lines: Developers have been turning aging class B and C office buildings into apartments in St. Paul for the past 12 years, helping more than double the downtown population to 10,572 as of August, according to the Greater Saint Paul Building Owners and Managers Association.
- Conversion of a class A property like Landmark Towers, considered among the newest and highest quality in the market, is bound to raise some eyebrows in a city that's lost a few of its bigger employers in recent years.
- Landmark Towers (it's actually just one tower) represents about 8% of downtown St. Paul's class A office space, according to data from BOMA.
What they're saying: Joe Spencer, president of the Saint Paul Downtown Alliance, said the towers — built in 1983 for Amhoist — had become less enticing to tenants because of limited amenities, small floor sizes and deferred maintenance.
- "Adding residents to the Rice Park district will be good for supporting restaurants, retail and other storefront businesses in the area," Spencer said in a statement.
Chris Sherman expects more 1970s and 1980s buildings to be converted across the Twin Cities.
- "The great thing about the housing conversions for these buildings is that it's bringing more people into the core 24/7, 365, whereas the office workers are just in there from 8 to 5 or 6 and then going home."
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