Commercial real estate transactions can transform outdated but classic structures into a 21st century development. The Depression-era former post office in St. Paul will, after renovations, become a 149-room Hyatt, 202 luxury apartments and a street-level restaurant. Nearly 400 workers will be employed on the construction which is estimated to cost $125 million.
Exeter Group bought the building, originally designed in 1930s art deco, in 2013 for $5.25 million. It sold most of the first five floors of the structure to Des Moines-based Nelson Construction & Development for $2.85 million. Nelson will begin constructing the Hyatt in March. Exeter will perform the rest of the development and started construction on the lobby and residential floor in November.
The 17-story, overlooking the Mississippi River, is located on Kellogg Boulevard and was listed on the National Register of Historical Places in 2014. It will be restored to its original art deco style based on the U.S. Postal Service’s original plans. Postal services ended in the structure in 2013 and it also housed government offices, a customs house and a mail sorting facility.
Tax credits for restoring historic buildings will help pay over $25 million in renovation costs. Financing will also consist of $5.8 million in tax increment financing, a Metropolitan Council grant of $850,000 and a Department of Employment and Economic Development grant of $725,000.
The apartments will be classified as high end. Leasing will begin in the summer.
Opus Development is also planning two similar projects in the Seven Corners area close to the Xcel Energy Center. During the last few years, hundreds of apartment units have opened in the city. While there is a strong demand for residential units in St. Paul, the office market needs to grow.
These types of commercial ventures incorporate issues pertaining to zoning laws, historical preservation, construction law, government financing and a myriad of other financial and legal issues. Understanding how these issues work together can be essential to the success of a commercial real estate development venture.
Source: Pioneer Press, “For riverfront, art-deco gem, a Hyatt hotel, high-end housing,” Nick Woltman, Feb. 26, 2015