Troubled Uptown office complex headed to auction
Add Axios as your preferred source to
see more of our stories on Google.
The MoZaic buildings along the Greenway. Photo: Nick Halter/Axios
The struggling MoZaic office and entertainment complex in the heart of Uptown is slated for a pair of sheriff's foreclosure auctions.
Why it matters: Once a sign of neighborhood progress, the fall of the MoZaic properties underscores the recent struggles in Uptown — where commercial vacancies have shot up following crime issues, remote work and road construction.
Driving the news: A Hennepin County judge ordered auctions to be held Dec. 12 and Jan. 9. The properties headed to the block include the 64,000-square-foot MoZaic West office building, the 190,000-square-foot MoZaic East office building and the recently renovated Landmark Lagoon movie theater.
Catch up quick: The two office buildings, near Lagoon and Hennepin avenues, were completed in 2012 and 2019, respectively. They were 63% vacant when put up for sale last year.
- The offering came after the east office building lost anchor tenant WeWork.
- The west building's major tenant, ad agency Mono, is moving to the North Loop in July, the company confirmed.
Follow the money: Lender First National Bank of Omaha (FNBO) filed suit to foreclose on the properties in February, alleging that the owners — several LLCs with ties to local developer Stuart Ackerberg — have defaulted on two loans and owe $55.3 million.
- Ackerberg personally guaranteed those loans, according to court documents. He owns several buildings in Uptown.
- Edina-based OV Realty Holdings is also being sued by the bank as it was the master lessee of the buildings. That company is an affiliate of Olympus Ventures, which is the family office of Best Buy founder Richard Schulze. Its attorney, Thomas Berndt, declined to comment
- There's a trial scheduled for next year as the bank seeks damages from Ackerberg and OV Realty Holdings.
- Attorneys for FNBO and Ackerberg did not respond to a request for comment.
State of play: In court documents, the owners said they had credible offers to sell the complex, but FNBO refused to allow a short sale (selling for less than what is owed on the loans).
- The owners have not made any property tax payments this year, according to Hennepin County records, and owe $737,541.
What we're watching: There are hopes that Uptown is making a comeback, with a reopened Hennepin Avenue at the heart of that optimism. Crime is also down in most categories in the neighborhoods surrounding the buildings, according to city data.
Yes, but: While new office buildings in other parts of Minneapolis have had success in leasing, it remains to be seen if there's enough office demand for Uptown to have a similar win.