Thank you for sharing!

Your article was successfully shared with the contacts you provided.

MINNEAPOLIS-A joint venture between locally-based Hempel and Baltimore-based Alex. Brown Realty Inc. has purchased the 194,316-sf Rand Tower for about $10.2 million. Chesapeake Fund III, a value-add real estate investment fund sponsored by ABR, provided an equity commitment to the venture. Steve Katkov, VP and Midwest Regional Manager with First American Exchange Co., facilitated the 1031 exchange for the property. The 79-year-old building was sold by Gaughan Cos., which reportedly paid $11.2 million for the office in 2004.

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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.