Hempel, ABR Buy Historic Rand Tower for $10M

The building is 74% occupied, but will boost up to almost 80% when Hempel moves its headquarters into 10,000 sf of the building, says Tom Burton, VP and chief investment officer with ABR. "We've got a smart plan for filling the vacancy, including a $2.3 million plan for improvements," he tells GlobeSt.com. The capital will be spent to upgrade elevators and common areas, as well as other fixes, he says. The property is a historic property, but does have the smaller floor plates from years ago, Burton says. He did not divulge lease rates at the property.

The property was built by Rufus R. Rand Jr., a famous aviator and heir to the Minneapolis Gas Co., who incorporated aviation themes into the 26-story building at 527 Marquette Ave. The facility was also known as the Dain Bosworth Tower, because the brokerage once anchored the building.

This will be the first investment in Minneapolis for ABR, Burton says. "We've traditionally focused on West markets, Florida and the Carolinas, we've only most recently started to look at transactions in the Midwest. This is our 13th investment in the Midwest since 2006, we've become quite active there, there's good stable markets with talented real estate operators," he says. The Minneapolis market is fine, with about 15% vacancy, but that's not what attracted ABR, Burton says. "We don't go looking for a specific market, we look for a niche properties in markets that have good fundamentals," he says.

Hempel Properties is already working on a $63-million effort to convert half of a 235,000-sf office building at 501 Marquette Ave., next door to the Rand, into a hotel. The company also has UBS Plaza in St. Paul, Woodhill Plaza in Minnetonka and One Corporate Center I and III in Edina, as well as the Hotel Minneapolis, a redeveloped Doubletree property that is a block away from the Rand.