Officials with Chicago-based CEDARst Companies aren’t letting the COVID-19 pandemic slow their development plans. And they’re not just targeting their home market of Chicago. CEDARst has big dreams for Minneapolis, ready to bring more than 500 new apartment units to the city.
CEDARst earlier this year announced plans to transform the buildings that served as the home for the C.J. Duffey Paper company into The Duffey Lofts. This project will bring 190 new multifamily units and 20,000 square feet of commercial space to Minneapolis’ busy North Loop neighborhood at 500-528 Washington Ave. N.
But that’s just one project. CEDARst has also acquired two adjoining historic properties and a land site in the North Loop neighborhood. The company will redevelop the property as 6th and 3rd, a 345-unit multifamily complex, one that includes a variety of high-end amenities, including a rooftop ice rink.
Will Murphy, chief executive officer and managing partner with CEDARst Companies, said that Minneapolis had long been on his company’s radar. Why? The commercial real estate market here has been so strong for so long, that Minneapolis is a natural target for any company looking to expand into a new and bustling slice of the country.
“Minneapolis, perhaps better than many Midwest markets, has mirrored the top coastal cities, places like Los Angeles and New York City, when it comes to the strength of the market, rent growth and occupancy trends,” Murphy said. “It has one of the best unemployment rates in the country. It also has a very educated, affluent demographic and workforce.”
Murphy said that the strength of the Minneapolis market coupled with the commercial growth now taking place in its North Loop submarket made the area a desirable one for CEDARst.
CEDARst acquired its latest North Loop site for about $21.1 million, buying the property from a consortium led by the Martin Falk Paper Company. The seller was represented in the sale by Pat Minea and Dan Trebil of NorthMarq, who facilitated acquisition financing from First Western Bank & Trust. Lamar Newburn of Lee & Associates represented CEDARst in the transaction.
This latest acquisition by CEDARst includes two multi-story warehouses. The first is an eight-story, 275,000-square-foot property and the second is a five-story, 108,000-square-foot building. CEDARst also acquired an adjacent 32,000-square-foot surface lot.
According to CEDARst’s development plans, the renovation of the larger warehouse includes 260 residential units, 15,000 square feet of retail space and underground parking. The smaller building will be transformed into a 20,000-square-foot amenity space along with 7,000 square feet of retail space, 50 residential units and underground parking.
CEDARst’s plans for the surface lot call for the development of 34 residential units, 20,000 square feet of ground-floor retail and parking for 284 vehicles.
Murphy said that the sheer size of 6th and 3rd sets it apart from other new multifamily developments throughout the Twin Cities. Then there’s the fact that CEDARst will be returning two existing buildings back to their former glory.
“They are both beautiful buildings,” Murphy said. “We truly think this project can be iconic within the Minneapolis market.”
CEDARst expects to break ground on the project in the fourth quarter of 2020. The construction cycle on 6th and 3rd should last about 20 months, which means CEDARst should begin delivering apartment units in the summer of 2022.
What helps set this project apart is the amenities package. This includes a rooftop ice skating rink/icehouse featuring views of the Minneapolis skyline. The rink can be converted to a soccer field or other uses in the spring and summer.
Other amenities include a bowling alley, paddle courts, swimming pool and coworking center. The complex also will feature coffee and grab-and-go food through CEDARst’s Heritage-branded affiliate.
“We believe that our amenities will differentiate this project from the rest of the market,” Murphy said. “We want to be a market leader when it comes to amenities.”
That rooftop ice rink is an example. Murphy said that the amenity was a natural fit for Minneapolis, a town dotted with passionate hockey fans. Murphy said that the rink, when complete, will offer expansive views of the Twin Cities skyline.
Of course, it’s difficult to discuss any major development project without wondering how the COVID-19 pandemic might alter plans.
Murphy said that CEDARst did pause briefly to consider whether it’d make sense to push back construction on 6th and 3rd. But the company spent nearly 12 months of due diligence when planning for the project. It had long studied the Minneapolis and North Loop markets. And Murphy says that CEDARst is confident that the North Loop and Minneapolis will emerge in a healthy state once the pandemic passes.
“We felt comfortable in our ability to execute this project,” Murphy said. “When we need to capitalize this project in seven to eight months, we think the debt and equity markets will be back. When we bring the project online in two years, the idea is that COVID-19 will be a distant memory. We are in this for the long-term.”