Finance & Commerce –
Mayo Clinic and the Minnesota Timberwolves and Lynx basketball teams will cover nearly half the $50 million-plus needed to revive the Block E building in downtown Minneapolis. Representatives from Rochester-based Mayo and the teams gathered Tuesday in the former movie theater lobby of Block E to announce a $25 million-plus partnership to create a sports medicine center, practice courts and basketball offices on the third floor of the building, at 600 Hennepin Ave.
Mayo Clinic and the teams are the first major tenants to commit to the 213,000-square-foot building since AMC Entertainment pulled out in September 2012 after a contentious lease dispute.Along with the clinic and practice facility, the group and building owners Camelot LLC announced that they will shed the Block E name and call the structure “Mayo Clinic Square.”
“Our mission is to add long-term vitality to this great location in downtown Minneapolis,” said Phillip Jaffe, a principal with Provident Real Estate Ventures, the asset manager of Block E owner Camelot LLC. (Provident’s principals and Alatus LLC’s Bob Lux are partners in Camelot.)
Mayo Clinic Square will house the roughly 20,000-square-foot sports medicine center, about 52,000 square feet for the Timberwolves and Lynx basketball operations, and another 23,000 square feet for the teams’ office space on its third and fourth floors. Carl Runck, director of real estate development for Alatus, said after the announcement that the entire project will cost “north of $50 million,” but that final costs can’t be determined until office and restaurant spaces are leased. Timberwolves and Lynx team representatives said they will spend more than $20 million on their new facilities. Mayo Clinic will pay between $5 million and $7 million for its sports medicine clinic. Jaffe said Tuesday that the building’s second floor will be used primarily as office space for other tenants and that Camelot is seeking “signature restaurants” for the ground floor.
“Our goal is to animate the street and make it more pedestrian-friendly than it is today,” Jaffe said.
Nearly 120,000 square feet of space on the building’s first and second floors is still available. Jon Dahl and Brent Robertson of Jones Lang LaSalle are handling office leasing and CBRE Group’s Chicago office will work on attracting the restaurants.
This is Mayo Clinic’s second swing at establishing a presence in the Twin Cities. The clinic until 2012 was expected to serve as an anchor tenant in a 140,000-square-foot office space expansion at the Mall of America in Bloomington. But in 2012, the clinic said it had evaluated all planned capital projects and decided to pull back. In early 2013, Mayo announced it would leave the Mall of America altogether. It closed the Mayo Clinic Healthy Living at Mall of America — a 2,500-square-foot store on the mall’s first floor — in February, just two years after opening it in 2011.
The Minneapolis site is not Mayo’s first location focused on sports medicine. Mayo announced plans last summer to opena 22,000-square-foot sports medicine facility in Rochester this spring. Mayo officials said they wanted to become a destination for hockey-related injuries among other things, with a treadmill to study skating techniques. Mayo hosted a concussion summit last fall to bring physicians, hockey coaches, players and other stakeholders together to discuss the latest concussion information. Mayo officials said Tuesday that they hope the Minneapolis and Rochester clinics will be “synergistic.”
“This is an opportunity to have a focus on the Twin Cities area and also utilize the global platform that the Timberwolves and Lynx provide,” Edward Laskowski, co-director of the Mayo Clinic Sports Medicine Center, said after Tuesday’s press conference. “We want to be a sports medicine resource for everyone.”
In November, Provident representatives announced plans to redevelop Block E into a practice facility for the basketball teams as well as office and retail space. The owners have been involved in multi-party negotiations with the city and potential tenants since then. Preliminary plans for the building show two practice basketball courts taking up the building’s third floor where AMC’s 15-screen movie multiplex once operated. The courts are surrounded by locker rooms, offices, meeting spaces and other team-related uses. Existing retail tenants Kieran’s Irish Pub, The Shout House Dueling Pianos, Jimmy John’s and Starbuck’s Coffee plan to remain.
Camelot privately funded the $14 million purchase of the property in 2010. The company assumed more than $28 million in tax increment financing. Camelot said the remaining $13.2 million TIF balance is on track to be repaid by 2019, seven years ahead of schedule. In 2011, Alatus pushed for legislative approval for a downtown casino at Block E and a $352 million overhaul. The plan failed to get momentum at the Legislature.
The project team for the joint Mayo and Timberwolves project includes Golden Valley-based Mortenson and Los Angeles-based AECOM. Minneapolis-based RSP Architects is designing the building’s exterior and interior core renovation.
Date: February 4, 2014 9:48am CST
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