Developer Schafer Richardson has dropped plans to turn a 96-year-old warehouse in Minneapolis’ North Loop district into a 60,000-square-foot office complex, and plans to construct a new apartment building at the site instead.
The two-story structure, commonly known as the Zuccaro’s Produce building, is located at 1000 N. Third St., just south and west of the intersection of 10th Avenue N. and Washington Avenue N., and situated next door to the Minneapolis Public Housing Authority’s main office.
Schafer Richardson paid $1.9 million for the property in May 2017. Shortly thereafter it put forward a proposal to renovate the existing building and add three more stories. The proposal was approved by the city’s Planning Commission that June.
This Thursday, the company is preparing to pitch a new plan for the site to the Planning Commission’s Committee of the Whole: Schafer Richardson now intends to raze the building and construct a six-story, mixed-use building called The Redwell in its place.
The Redwell would have 129 apartments, most of which would rent at market rates. The company is hoping to include 10 units that will be set aside for Section 8 recipients, said Maureen Michalski, Schafer Richardson’s director of development.
The Redwell will also have about 10,000 square feet of commercial space on the ground floor, which would probably be most suited to an office user, Michalski said, adding that demand for office stock in North Loop is still very strong.
Michalski said Schafer Richardson decided to change course after it became apparent that the Zuccaro building’s small footprint was a stumbling block. The floorplates are about 9,000 square feet, which made it difficult to nail down larger office tenants that can typically commit to long-term lease agreements.
“There are tenants in the market looking for smaller spaces. However, the challenge with new construction is meeting pre-leasing requirements for lending,” Michalski said. “We find right now that most small users are looking for available spaces three months out from when they need to be in a building. We would need tenants to commit a year in advance for a lease.”
Michalski added that the company was not motivated by what could be a glut of new office space entering the market.
Construction is already underway on Minneapolis-based Swervo Development Corp.’s new 500,000-square-foot office and retail development at 419 Washington Ave. N. A few blocks away, United Properties is going to put up The Nordic, a 10-story, 200,000-square-foot building at 729 Washington Ave. N. that will be mostly used for office space, though there will be an apartment component and street-level retail as well.
Construction on The Redwell will begin by the end of the year, and is expected to take 14 months to complete. Michalski declined to disclose the total development cost.
