Redistricting

Architecture firm Hammel Green and Abrahamson (HGA) had renovated the old Bill Boyer Ford building on Harmon Place on the southwest side of downtown in 1981. “That was somewhat groundbreaking at that point in time for that neighborhood,” notes HGA CEO Dan Avchen. By the late 1990s, though, HGA had outgrown that space and got wind of space coming on the market in the old Litin Paper building at 701 North Washington Avenue. “It was perfect for us,” Avchen says. “And it meant that we were going into what, at the time, was a kind of new up-and-coming area. So it was similar to what we did in 1981 in that other neighborhood.” After overseeing its renovation, HGA moved into the Litin building in the summer of 2001.

“Now of course, things have grown up around us,” Avchen says. “Washington Avenue has been renovated—that hadn’t been done when we came in here. Although we would have liked them to put in some trees on the avenue. I still don’t understand why there are no trees.” To compensate, HGA installed what Avchen calls “a vest-pocket park” in front of its building.

Old is New Again

Avchen’s landlord, Ken Sherman, well remembers the first time he stepped into the Litin building. “It was a disaster,” Sherman recalls of his 2000 purchase. “There was nobody there. It was a complete gut and redo.”

And in the past several years, there’s been a lot of redoing around the Warehouse District. Martin Bush and John Rimarcik haven’t been the only longtime building owners to cash out. One of the most notable was a group led by Burt Corwin, whose family was among the owners of the Wyman buildings after 1945. Corwin’s holdings also included structures on Fourth Street around Second Avenue North, among them the building that currently houses a Sawatdee restaurant and another that was home to the New French Café. In 2005, the group sold these buildings to Swervo.

Why have the likes of Corwin, Bush, and Rimarcik been selling? The simplest answer is the one Leer gives about Bush’s 801 Washington sale: “Because he could make a lot of money. The timing was perfect for him. He had no mortgage on the property.”

According to Mark Kolsrud, senior vice president with the Minneapolis office of commercial real estate firm Colliers Turley Martin Tucker, “we’re seeing a much better market time now” after a period of high vacancy rates and low return on investment for tenant improvements. “Suddenly, we’re seeing rent growth, we’re seeing absorption of vacancies, we’re seeing subleased spaces getting leased up . . . . So that some of the people that have been hanging on through the tough times finally can achieve a sale price that they’ve been hoping for a number of years.”

Buyers now have access to capital that’s looking for something firmer than, say, the equity markets, Kolsrud explains. What’s more, the new owners “can grow their investment, and do things with the buildings that the previous owners haven’t been able to do,” he adds. The sellers “weren’t real estate investors—just property owners.” They typically sat on their properties because they didn’t know how to fix them up. The buyers do, he says, having “skinned their shins a few times” on previous renovations.

The Corwin group apparently got their price. “Most people in our business knew that the Wymans were going to be available, and many people inquired for many years about their availability,” Sherman says. “Generationally, a lot of buildings have turned in the last year or so, because a lot of owners got old and their heirs said, ‘Look, you can maximize value by selling this building today, so let’s go ahead and do it.’”