Downtown Minneapolis' LaSalle Plaza trades at a steep discount

Distressed downtown Minneapolis office tower LaSalle Plaza has been acquired by a local developer at a steep discount from the previous sale price.

Details: Eden Prairie-based Hempel Cos, a firm with a track record of breathing new life into struggling real estate, declined to disclose the price.

• But the Minneapolis/St. Paul Business Journal reported that the firm paid $46 million, which is a third of the $155 million that the Teachers’ Retirement System of the State of Illinois paid for the tower in 2011.

Why it matters: The acquisition cost shows what many have been anticipating: Declining values for office properties thanks in large part to a rise in remote work and less demand for office space.

What they're saying: Hempel chief operating officer Nick Monson told Axios that the price is low enough to allow Hempel to make upgrades that will attract and retain tenants in the 30-story limestone and glass tower.

• Monson said Hempel is planning to add pickleball courts to the building, likely on the first floor. It also plans to offer Cadillac Escalades to transport tenants around downtown.

The big picture: This sale price is likely to be a sign of things to come as many office buildings are facing similar distress.

• LaSalle Plaza's vacancy was more than 30% last fall when the landlord gave the building to its lender instead of making more loan payments.

• In the past year the building has lost Rock Bottom Brewery on the main floor and CBRE as an office tenant. The big question will be if it can keep its longtime anchor tenant, law firm Robins Kaplan.

Yes, but: Downtown boosters will be happy that a firm like Hempel is the buyer.

• The company redeveloped the former St. Paul Macy's store into retail offices and a rooftop practice facility for the Minnesota Wild, and turned the old Midland Bank building into Hotel Minneapolis (now Hotel Emery), among many other projects here and in Milwaukee.