A judge's recent ruling approving the potential foreclosure of the Dayton's Project sets up a thorny question: What's going to happen to one of the biggest — and emptiest — buildings in downtown Minneapolis?

Why it matters: If some creative developer can't figure it out, there's a risk that one of the city's largest properties, in the heart of Nicollet Mall, could remain hollow and fall into neglect.

Catch up quick: New York developer 601W's $350 million redevelopment of the former Dayton's department store turned out to be a flop after a buzzy 2017 kickoff that included plans for an Andrew Zimmern-curated food hall.

• The 1.2 million-square-foot property struggled to land tenants right away, even before the pandemic. It once reached 28% occupancy but it's losing its biggest tenant, the accounting firm EY, and the food hall has been scuttled.
• 601W owes lender Fortress Investment Group $220 million in unpaid principal, interest and fees, while the building's city-assessed value is around $27 million.

An attorney for Fortress laid out the issue during a January court hearing:

• "If they foreclose on this, they're going to get the privilege of owning an empty building that is going to require significant operating costs."

Fortress declined to comment on its plans for the property, so it's unclear whether it intends to hold or sell it.

Between the lines: Even if you could buy the Dayton's Project for $1, a building of its size will cost millions per year in property taxes, heating and cooling, security and maintenance.

• To cover those expenses, a landlord would need to find tenants in a city where about a third of all office space is vacant and other landlords are practically giving away retail space.

The good news: The recent renovation upgraded all of the building's mechanicals, elevators and added high-end tenant amenities, so it's really just a matter of building out office space.

• Some office space has been finished — but most of it hasn't, and the buildout is likely to cost $110 per square foot, according to court records.

The other side: Why not just turn it into apartments, which are still in demand?

• The problem is that the building has floors nearly the size of two football fields, so most of the space is too far from natural light to be suitable for residential use.

Previous developers who were interested in buying the building in 2017, when Macy's closed its store, had proposed cutting out the middle section to create smaller floors with more natural light.

• But that would be very expensive and because the project got historic tax credits, it may be a tough sell to state administrators that doing so wouldn't ruin the historic character of a former department store.

The big picture: A buyer would have a good chance at qualifying for state and federal historic tax credits to offset 40% of the costs of more redevelopment, according to Meghan Elliott, who is the Twin Cities' go-to consultant for these types of projects.

• The building has already received 10s of millions of dollars in these credits.
• Elliott also told Axios that since the office space is on the upper floors, there might be a case to be made that removing a light well wouldn't disturb the historic character.

What we're watching: There's no date yet for any potential auction, and it's not clear whether 601W will appeal, as the firm's attorney did not respond to a request for comment.

Complicating factors

Minneapolis Mayor Jacob Frey and U.S. Rep. Tom Emmer were unhurt while attending the White House Correspondents' Association dinner that was disrupted Saturday night by a gunman said to be targeting President Trump.

What they're saying: "The coward who attempted to attack an event celebrating our constitution and American values must not deter us as a nation," Emmer said on X. "Political violence will never be tolerated."

Zoom in: The mayor's office said Frey was in D.C. on official city business, but attended the dinner as a guest of cable network MS NOW.

• "Countless kids across America experience the fear of gun violence every day when they go to school," Frey said in a statement. "That it was new to many people in the room last night who have the power to change gun laws should be a necessary wake-up call."

The latest via Axios

🎯 Target has ordered 150 remote employees back to the office, offering relocation assistance to those who move to the Twin Cities and severance packages to those who refuse. (KARE 11)

🏡 Minneapolis City Council members are trying again to extend the city's eviction timeline to help immigrant renters after Operation Metro Surge, despite Frey's earlier veto. (Axios)

🗳️ The Minnesota Republican Party called on U.S. Senate candidate Royce White to suspend his campaign after a judge ordered him not to contact his ex-wife or child following alleged threats. (MPR News)

• White, who is appealing the order, indicated that he won't step aside in a series of social media posts.

🏒 The defending champion Frost will play the Montréal Victoire in the Professional Women's Hockey League playoffs. (Fox 9)

The Timberwolves will try to close out the Denver Nuggets in their playoff series tonight — but without star Anthony Edwards.

State of play: ESPN reported Ant will be out "multiple weeks" with a knee injury sustained during the Wolves' win Saturday.

• But the good news is, since he didn't tear a ligament, he could return later this postseason if the Wolves advance.

Plus: Donte DiVincenzo will miss the rest of the playoffs after tearing his Achilles.

What's next: Game 5 tips off at 9:30pm.

Wild and Dallas Stars fans are getting treated to an instant classic of a playoff series, and Matt Boldy is a major reason why.

Boldy tipped in the overtime winner in the Wild's pivotal Game 4 victory Saturday — his third goal of the series.

• His eyepopping assist in Game 3 also echoed his gold medal game goal at the Olympics.

What's next: Dallas hosts Game 5 at 7pm tomorrow. The series is tied 2-2.