Minneapolis / St. Paul Business Journal –
Bob Lux is working to promote his ideas for a back-up plan should the state not approve a casino plan for the troubled Block E development in downtown Minneapolis.
Lux was interviewed on WCCO-AM radio this afternoon about Plan B for the site if the $300 million casino plan doesn’t get passed by the state legislature this session. The Star Tribune has more details on Lux’ plans in its Monday edition.
In an interview with WCCO-AM’s Chad Hartman, Lux discusssed carving the center into about 350,000-square-feet of office space, a couple of restaurants, and a small amount of retail.
Lux discussed breaking up the space into chunks of about 75,000 square feet, and seeking tenants interested in hanging their signs on the outside of the building.
Lux said he thinks the best alternative for the site is a $300 million casino because it would be transformative for downtown Minneapolis.
Alatus and its investment partners bought Block E in 2010 for about $14 million. Many of its retail tenants have closed since Alatus bought the building.
“If we can’t do the casino, then our backup plan is probably an office space,” Lux said, adding that it would stablize the neighborhood.
Hartman asked Lux what he would do with the movie theater space, which Hartman said would be closing soon and leave the complex less than 50 percent full.
“At some point, we certainly do want to put [the theater space] back into production,” he said. But he said the developers aren’t in a hurry.
“We don’t want to make any mistakes. The next life for it is something the city can be proud of.”
Lux couldn’t be reached for comment by the Business Journal Thursday afternoon.
It isn’t clear whether office tenants would be interested in the space at Block E. The downtown Minneapolis vacancy rate for office space is about 18 percent, down from 19 percent a year ago. It’s expected to trend lower again in 2012 because no new office space is being added to the market.
The market for Class A office space is even lower, between 11 and 12 percent, according to a report published Monday by Cushman & Wakefield | Northmarq Real Estate Services. Block E is in a premium location, near office, retail and entertainment buildings. However, since it isn’t a high-rise, it might have trouble attracting Class A-type tenants.
There have been some examples retail space, including Gaviidae Common and City Center, that have successfully converted to office use, with M&I Bank and the Minnesota Law Center as tenants, for example.
Lux’s timing for announcing Plan B is interesting, since he says he’s still focused on the casino. It could possibly be a lobbying tactic for the casino.
After all, the idea of renovating the complex for office space could perhaps persuade lawmakers to approve the gambling plan if they want to see something more exciting that would, undoubtedly, generate a bigger investment.
By: Sam Black
Date: Monday, January 30, 2012, 2:59pm CST
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