Minnesota cities have to keep up with changing commerce that can decimate a real estate market, urban growth and property values. Downtown St. Paul, for example, once had eight department stores and lost the last remaining Macy's Department Store in early 2013. Following Macy's closing, there were plans to develop the site as a giant parking ramp with office space for the Minnesota Sex Offender Treatment Program.
Last Friday, however, an Excelsior-based real estate investment company agreed to remake the former Macy property on Wabasha Street into a hockey facility for the Minnesota Wild and to transfer the tan building exterior into a glass façade. The hockey team is interested in constructing an enclosed practice rink on the roof of the structure. It currently practices in several facilities around the Twin Cities.
The St. Paul Port Authority, the site's owners, also plans to finalize an agreement to locate a 26,000 square foot Walgreens store on the building's street and skyway levels. An unidentified brew pub, restaurants and various business are also interested in relocating into the building.
The Oppidan Investor Co, the project's developer, will make a $5 million cash contribution to the project and guarantee a $47 million construction loan. The Port Authority will contribute the building that it bought for $3 million from Macy's in 2014. The Authority will be entitled to 10 percent of the profit from the project but will have an equal say in all of its decisions through a nonprofit subsidiary.
City officials had to repeatedly change plans for the building after its purchase when several plans failed. It spent over $1 million, in addition to the purchase price, attempting to find a building developer. Mayor Chris Coleman stopped the plan to develop the site into a parking ramp because it was the antithesis of his vision for developing the site.
Commercial real estate transactions often implicate numerous public and private entities and numerous state and municipal laws.Businesses and property owners need to make sure they understand how a project will be affected by local regulation, the importance of contract negotiation and other ramifications of the deal before it moves forward.
Source: Minnesota Public Radio, "St Paul picks Macy's site developer; wild practice rink planned," Curtis Gilbert, Sept. 18, 2015