MINNEAPOLIS—City Center Realty Partners, LLC and its partner Angelo, Gordon & Co., have just sold this city's Plaza Seven office tower to Franklin Street Properties Corp. for $82 million. It's a big gain for CCRP, which bought the downtown property just three years ago for $43.6 million and significantly boosted its occupancy rate.

It also may be a sign that another round of lucrative trades has begun. As reported in GlobeSt.com, a few years ago investors like the San Francisco-based CCRP, which has invested heavily in several other office properties here, bought up many office buildings both downtown and in the suburbs. And a few months ago, the owner of the IDS Center, the Twin Cities' most notable office property, named Holliday Fenoglio Fowler, L.P. to market it for sale.

“The Midwest is looked on very favorably by institutional investors,” Adam Short, vice president of Golub & Co., tells GlobeSt.com. And many consider Minneapolis, which has one of the lowest unemployment rates in the nation, to be its top secondary market. “That bodes well for existing owners. A few more office properties may hit the market this year.”

The Chicago-based company Golub, which owns several suburban properties in the Twin Cities, recently bought the 415,000 square foot RSM Plaza in downtown Minneapolis, and plans a $10 million renovation of the property.

Plaza Seven, a 336,000 square foot class A office building on Nicollet Mall, is part of a mixed-use project that includes a Radisson Blu hotel on floors 1 through 17. It was not part of this transaction. The office tower comprises floors 18 through 36 and includes 311 underground parking stalls. Stephen Livaditis, Kenneth Glomb, and David Knapp of Eastdil Secured represented CCRP in the deal.

When CCRP acquired the property, it was only 58% leased. But it invested nearly $5 million in capital improvements, including installation of the city's first destination dispatch elevator system in a multi-tenant building; negotiating an easement within the neighboring Macy's store to provide a clear and branded entrance into Plaza Seven from the skyway system; renovation of the skyway-level lobby; and transformation of view-obstructing, heavy build-outs into white box condition.

After finishing the improvements, CCRP completed more than 140,000 square feet of leasing, increasing the occupancy to 97%. Credit tenants added to the building included PwC, Epsilon, Associated Bank, and Faithful & Gould.

“We couldn't be happier with how our strategy performed,” says Sigurd Anderson, founding partner and chief executive officer of CCRP. “We acquired a building that was nearly 50% vacant, recognizing opportunities to add value, invested in smart capital expenditures, and the market responded.”

And Franklin Street, a Wakefield, MA-based real estate investment trust, also has plans for Plaza Seven. It will invest about $1.9 million over the next four years in its new acquisition. Furthermore, about 30% of the leases expire over the next three years at rents that company officials “believe average approximately 15 – 20% below comparable current market rents. We believe that these upcoming lease expirations provide us with a near term potential opportunity to add value by marking leases to market.”

Instant Insights /

Lucrative Office Sales Return to Twin Cities

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