Mar 15, 2022 - Real Estate

A half-billion-dollar tower alters Minneapolis' skyline

A glassy RBC Gateway Tower

Photo: Nick Halter/Axios

The newest tower in the Minneapolis skyline is the most expensive project completed without public money in city history.

Why it matters: The 37-story RBC Gateway Tower, which partially opened last month, will eventually pay an estimated $6.5 million annually in property taxes that support city services, schools and parks.

Details: The Pohlad family's real estate company, United Properties, developed the $480 million project at the high-profile intersection of Nicollet Mall, Washington Avenue and Hennepin Avenue.

  • The 508-foot tower has 531,000 square feet of office space, a 222-room Four Seasons Hotel and 34 luxury condos, all priced at seven figures at least.

Yes, but: When construction started in 2019, nobody had heard of COVID and downtown was teeming with office workers and travelers.

  • With all that's happened to the city in the past two years, Axios asked United Properties president Bill Katter if he would still do the project if he knew then what he knows now.

What he's saying: "If I could go back, I would add 10 more floors of office space," Katter said during a tour of the building last week.

  • Companies — wanting nicer space to lure employees back from their homes — have continued to inquire about availability, Katter said.
  • But there's not much left. The office space is already 95% leased, with RBC Wealth Management and the Pohlad companies taking most of it.
An office space in RBC Tower
A conference room in RBC Wealth Management's new headquarters. Photo: Nick Halter/Axios

Condos and hotels face a tougher market. Hotel occupancies in downtown finished 2021 at 30% and condo sales have been sluggish post-COVID.

  • Katter said condos are selling better than expected, though he didn't give specific numbers. A top-floor, unfinished condo is being marketed in the ballpark of $10 million, he said.
  • The condos are under the Four Seasons brand, and buyers get access to the hotel's housekeeping and room service.
  • Katter said UP conservatively budgeted for the Four Seasons to become profitable — it has a five-year plan.

Chuck Lutz, a longtime Minneapolis development official, served as point person on the project for the city before retiring.

  • The only non-stadium project with a bigger price tag that he can recall is the five-block Wells Fargo redevelopment next to U.S. Bank Stadium, which cost $600 million but included public financial support.

What's ahead: The hotel opens in June. Even if you can't afford the $525 rooms, you can still eat at the Four Seasons' restaurant and visit the spa.

A view of Minneapolis from the penthouse condo on the top floor of the new RBC Gateway Tower.
A view from the penthouse condo on the top floor of the new RBC Gateway Tower. Photo: Nick Halter/Axios

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