As Minneapolis workers return, there’s a new tower on the horizon
From the start, a sleek new office tower — the tallest in 30 years in downtown Minneapolis — was going to be the biggest challenge of Rick McKelvey’s career.
Plans for the 37-story RBC Gateway tower included offices, a five-star hotel, restaurants and nearly three dozen condos.
All this atop a street-level entrance podium with four distinct lobbies and an integrated bus stop. The architects cut away a corner of the building to create a public plaza that could one day accommodate a new tram station.
“It’s one of the most complicated buildings in the city,” said McKelvey, senior vice president of residential development for Twin Cities-based United Properties.
And it came together amid the pandemic, which has shut down much of downtown, and times of turmoil following the police killing of George Floyd and related trials.
“Once we started, there was no choice but to deliver this building when we said we could,” McKelvey said. “We made a promise.”
Barely three years after construction began, the tower is nearly complete. RBC Wealth Management employees moved in on Monday, passing through a multi-story lobby adorned with stone plaques and world-class artwork. Outside, workers are putting the finishing touches on the reflective glass facade.
On the middle floors of the tower, hotel employees made soft beds and pillows. And on the upper floors, teams were finishing 34 seven-figure condos that will offer panoramic views of the city and the Mississippi River.
The tower is expected to bring 24-hour power to the north end of the Nicollet Mall, bridging the North Loop and Mill District neighborhoods along a section of the newly developed waterfront.
“When the snow melts and some of the symptoms of the pandemic start to fade, this building will be a source of new energy and the start of better months ahead for downtown,” McKelvey said. “It offers a fresh start.”
Steve Cramer, president and CEO of the Minneapolis Downtown Council, said the tower was opening at the perfect time. He said it signals a total transformation of the Nicollet Mall from a time when retail dominated into what he now calls an “eclectic mixed-use street”.
“We’re struggling with this narrative of the future of downtown and there are a lot of legitimate questions,” Cramer said. “But it’s not the last [new project] it happens to us and the catwalk helps symbolize that.”
Although the office and apartment vacancy rate is still much higher than normal and the restaurant and entertainment scene is still suffering, several major development projects are already underway.
A few blocks from the walkway, residents move into Eleven on the River, a 42-story condo tower where prices start at around $1 million. And in the North Loop neighborhood, construction is underway on North Loop Green, a 340,000 square foot mixed-use development with offices and hundreds of apartments.
Still, the walkway will test the expectations of city officials who nearly a decade ago asked developers to submit plans for an entire city block that had been vacant for decades.
Known as the Nicollet Hotel Block, the site housed one of the city’s most historic hotels and is located at what was once the gateway to downtown Minneapolis, near the base of the Hennepin Avenue Bridge. on the Mississippi River.
City planners have asked developers to aim for the moon with a 20-plus-story tower comprising commercial, retail, residential, office and hotel space. Located at a key intersection at the top of the North Loop, the Mill District and the Central Business District, the city wanted street-level retail, green space and transit connections.
“We won’t settle for anything less than iconic,” Jacob Frey, now Minneapolis mayor but then city council member, said in a letter to potential developers eight years ago.
Of four proposals, including an 80-story tower, the city chose a United Properties proposal for a $161 million tower with offices, rentals and a Hilton/Canopy hotel.
As the market changed, so did the plan and the cost. The budget for the built project amounted to almost 500 million dollars. Condos have replaced apartments. And the Four Seasons hotel chain replaced the original brand, Hilton.
RBC Wealth Management is committed to making the tower its global headquarters. The offices, which make up nearly half of the office space in the 1.2 million square foot building, will also house Pohlad Cos., owner of United Properties.
Most of the tenants who will occupy the building are already in downtown Minneapolis, so their move represents little change to the city’s commercial real estate scene.
According to a Q4 2021 report from Cushman Wakefield, about a quarter of downtown office space was vacant. This is only slightly above the metropolitan average.
Business brokers say demand for downtown office space remains uncertain as businesses navigate return-to-office timelines and space requirements.
Downtown hoteliers are also still dealing with the effects of the pandemic on travel, and the new Four Seasons will simply add to what is now an abundance of hotel rooms in the city.
Liz Rammer, president and CEO of Hospitality Minnesota, said hotel occupancy in downtown Minneapolis was 23.4% in January. Statewide, the occupancy rate was 38.6%, while the national rate was 47.8%.
Rammer said the novelty of the area’s first five-star hotel will certainly draw more people downtown.
“This kind of property gets a lot of attention,” she said. “When you have a new property, it galvanizes the spirit and emphasizes the good things that help everyone.”
Florian Riedel, general manager of the hotel, said its reservation system went live last week and it was too early to anticipate occupancy levels throughout the summer. But, he said, “It’s probably going to be one of the best hotels in our portfolio in North America.”
Several weddings, events and other gatherings are already in preparation. Riedel said he expects the tower’s two restaurants and cafe to be particularly popular as so many others have closed.
“This project will be the catalyst for other desperately needed residential and retail and restaurant developments in the immediate area,” said Cynthia Froid, the downtown Minneapolis agent marketing the Four Seasons residences. Condos range from 1,700 to 5,500 square feet with prices starting at $1.85 million.
Condos with corner locations and those with the tallest floor plans were the first to sell out, Froid said. About half of the buyers already live in or near the city center, while several others come from the suburbs.
A smaller segment, Cold said, comes from out of state but has ties to Minnesota. Wherever they’re from, she says, she hopes they’ll call their new neighborhood the “gateway.”