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MPLS: The Nicollet

NorthStar

By NorthStar
in The Twin Cities

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Minneapolitan Whistle-Stop

Minneapolitan

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just a lot of buzz about financing problems, other payment problems, lackluster sales --- many in the real estate biz seem skeptical.

And, the number of days for existing and new construction on the market is getting longer and longer --- Grant Park has numerous units on the market for more than six months --and it is far cheaper than the Nicollett. It has some thinking that the demand is more than met by the existing projects. All the speculators (which may have represented 30% of the market) seem to have gone away.

A lot of that buzz is created by journalists who work for some of the smaller papers here in the Twin Cities area. They usually write up a half-assed story, send it to the printers, and then the Star Tribune or Pioneer Press has to clean up the mess. Also, a co-worker of mine who lives in Grant Park says there are very few units left and those that are left are the one bedrooms with a crappy view.

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MrSmith Whistle-Stop

MrSmith

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My sources are people in real estate and those responsible for financing large projects. They claim that there are numerous problems with the project (as evidenced by the fact that the project has already changed hands). In particular, apparently there are money problems. A project generally requires 50% sold before construction can begin. Since this is such a large project, it will take longer to reach that 50% than other buildings. In the meantime, architects, sales people etc. need to get paid --but do the developers have the money to keep the project going? By law they can not use the down payments of buyers to fund any part of the project.

As for Grant Park...Actually all the units sold in advance of completion of construction --faster than the Carlye and Skyscape. My point, however, is that the re-sale of these units is not going as well anymore for numerous owners.

In fact MLS currently lists a total of 18 units currently for sale at Grant Park (14 tower units and 4 townhomes). Another 15% of units have been rented by their owners.Some because they were unable to sell. Some units have been on the market for over 6 months. These units are significantly cheaper than the Nicollet per square foot. If demand downtown is so strong, you would expect these units to sell.

Interestingly, a year ago re-sales were stonger. In fact something like 25% of all the units at Grant Park were flipped within the first year.

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Minneapolitan Whistle-Stop

Minneapolitan

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If that were the case, why is the sales center still open and why is the tower still being advertised? Construction is supposed to start sometime in June. The date is approaching fast and the developers still haven't announced that it's dead, so I'm not concerned. There was all sorts of speculation about the IVY and how it wasn't going to happen but, it's now officially under construction. With that said, I think there's a lot of developers in Minneapolis and elsewhere in the TC area that don't want the Nicollet to be built because it will hinder the chances of their project being built.

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MrSmith Whistle-Stop

MrSmith

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My "sources" in development , financing and real estate assurred me the Ivy would be built --even when i thought it was dead. These same sources are extremely skeptical of the Nicollet. The issue they site is money.

In order to get financing and begin construction a developer generally needs 50% of the units under contract (purchase agreement). Which means in order to start construction they need 178 of the 356 units sold.

I believe the Nicollet currently has approx. 125 of the 356 units reserved. In March these will be turned into purchase agreements. According to my sources as a general rule only about 25% of reservations turn into purchase agreements. If this is true that means the Nicollet will only have 31 purchase agreements by the end of March --which is far short of the 178 needed.

Even if you are extremely optimistic and believe all 125 reservations will turn into purchase agreements they still need to sell another 50 units by June in order to reach the 50% level.

I think the project is still very possible -- but it definitely an uphill climb.

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Minneapolitan Whistle-Stop

Minneapolitan

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^ LOL! This is interesting because my "source" told me yesterday that over 140 units are reserved, 4 of the 6 "large" units are sold and the project is going to break ground this spring! I then decided it was time to visit the sales office so I went in this afternoon and had a long discussion with someone who is representing this project. I was told that over 140 units are reserved and "this will definitely break ground in June." I've since come to the conclusion that most, including those associated with the project, don't know what the hell is going on.

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sushisimo Whistle-Stop

sushisimo

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My "source" told me that Jesus was coming down on April 6th to bless the project himself before he heads out on Jesus Rocks The World Easter tour on the 7th.

So, I guess the project is a go.. ;):P

BWAH! But don't foget the project incorporates the Scientology office now. So, instead of Jesus, I think it will be Tom Cruise coming to town. Maybe he and Katie Holmes will buy a penthouse suite at the Nicollet.

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Gregory Crossroads

Gregory

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Hi-

New here. Just so you guys know, Mr. Smith is very negative about Minneapolis development. I'm not sure if it's actually a source but wishful thinking on his part.

I'm sure he's a good guy, just not a fan of development.....which makes his interest here kinda odd I suppose.

Nicollet will be built. In fact I believe we will see a super-tall within the year on the drawing board. I have positive sources and that's a rumor. Credible rumor actually.

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Minneapolitan Whistle-Stop

Minneapolitan

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^ C'mon! Mr. Smith has brought up legitimate concerns relating to some of these projects. He has attended neighborhood meetings and apparently has friends who are "in the know." He brings this knowledge to the debate and I respect that. I don't think he is "negative about Minneapolis development" at all. If anything, he wants the development process to flow smoothly and have a positive impact on the city.

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Gregory Crossroads

Gregory

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^ C'mon! Mr. Smith has brought up legitimate concerns relating to some of these projects. He has attended neighborhood meetings and apparently has friends who are "in the know." He brings this knowledge to the debate and I respect that. I don't think he is "negative about Minneapolis development" at all. If anything, he wants the development process to flow smoothly and have a positive impact on the city.

I completely disagree with you (no offense, friendly disagreement). I believe he is interested and involved, but that involvement is typically a negative involvement. No biggie, that's his right. I consider myself the anti- Mr. Smith. Pro growth, keep the skyscrapers downtown. Stop giving so many voices power. The city needs to unzone the downtown area. That would solve the problems.

And I completely respect Mr. Smith. He's not a whiner, he's a doer. Now I don't typically agree with a thing he says or in his goals and motivations...but you have to repsect someone that walks the walk...he does that. But you know what? About every nice project we have going he would stop if he could...so even though I respect him, I vigorously disagree with him.

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Gregory Crossroads

Gregory

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Super-tall? Will this be another residential tower, hotel, office, or mix-use? Did you hear how many stories or how tall this tower will be?

I have some pals at Ryan. There's been a 1000 footer (office tower-70ish story) in the pike now for about three years. No design has been designated nor does a developer have a signed agreement. The Normandy site is always talked about. This same guy told me three years ago a 50 story building was going to be built where the Nicollet is going up. He was right. This is beers at Ikes talking. But I think within 18 months we might finally have our first iconic since the IDS was originally built.

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Minneapolitan Whistle-Stop

Minneapolitan

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I have some pals at Ryan. There's been a 1000 footer (office tower-70ish story) in the pike now for about three years. No design has been designated nor does a developer have a signed agreement. The Normandy site is always talked about. This same guy told me three years ago a 50 story building was going to be built where the Nicollet is going up. He was right. This is beers at Ikes talking. But I think within 18 months we might finally have our first iconic since the IDS was originally built.

That would be great!! The office market is steadily improving (Class A space is now under 15%) so this could be a reality very soon.

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Gregory Crossroads

Gregory

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Personally, I'd love to see something like seattle's one supertall...which, IMO, is the most under-rated skyscraper in the world. It's a spectacular building. That would look great at the Kraus Anderson lot.

That would be great!! The office market is steadily improving (Class A space is now under 15%) so this could be a reality very soon.

Yup....and if the stadium is built, you put a few 50+ story residentials over there??? Wow, would we have a skyline.

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