By JIM BUCHTA • [email protected]
THE PRICE OF LUXURY
Total purchase price: $6.3 million Price per square foot: $1,442 Size: 2 bedrooms, 3 bathrooms Monthly association fee: $2,420 2016 taxable market value: $4.3 million Annual property taxes: $70,671
A downtown Minneapolis condo with glittering river views and its own manicured lawn fetched a record $6.3 million in a recent sale, shattering a previous high.
The unit, which occupies the entire top floor of a historic building in the Mill District along the Mississippi River, sold for an unprecedented $1,442 per square foot, or $250 per square foot more than the previous record and more than 10 times the metro average.
There were multiple bids on the unit, which like a growing number of luxury properties, was never publicly listed for sale.
Though a market outlier, the sale is just one of several notable deals in the area recently, reflecting deep demand for trophy properties in a hypercompetitive market. The frenzy contrasts with demand for expensive homes in the Twin Cities, which are not selling as fast as homes near the market median and less.
“The luxury market is alive and well,” said the listing agent, Cynthia Froid of Keller Williams Realty Integrity Lakes . “When people are looking, they’re willing to pay a premium for these signature properties that are defined by the view or an interesting feature that’s hard to come by, like vast outdoor space or an incredible view.”
In this case, the Washburn unit has both, including a full-on view of the entire length of the Stone Arch Bridge and St. Anthony Falls, and a private elevator.
Froid said that after notifying four buyers that the property was available, she got two competing offers.
The deal follows several seven-figure sales in recent months in the Mill District, which is sandwiched between the river and downtown Minneapolis. A sixth-floor unit at the Stone-bridge Lofts facing Gold Medal Park sold for $1.4 million, about double what the seller paid when the building opened three years ago.
“My client knew she was paying a premium, but knew it was a once-in-a-lifetime opportunity,” said Froid.
There have been several others in recent months. At the nearby Zenith condominiums, an eighth-floor unit with a wraparound balcony sold for the full asking price of $1.5 million. And at Humboldt Lofts, two buildings away from Washburn Lofts, the owners of an eighth-floor unit sold it last month for $1.3 million cash, exactly two years after paying $929,000. The offer was unsolicited.
Those examples are illustrations of the imbalance between supply and demand in the area. At the current sale pace, there are enough condos on the market in downtown Minneapolis to last just a couple of months, according to data from the Minneapolis Area Association of Realtors. That’s slightly below the metro average.
The supply situation, however, is about to change dramatically with hundreds of new units expected to hit the market in the next couple years. Alatus is in the final planning stages for an upscale 40-story condo tower on the riverbank opposite the Mill District. Developer Jim Stanton is nearing the end of demolishing the commercial building where he plans to build the Legacy, a 374-unit condo building a couple blocks from Gold Medal Park. Within a few weeks, residents will begin moving into Stanton’s Portland Tower, a 17-story condo building at the corner of 9th Street and Portland Avenue closer to the heart of the Central Business District.
Luke Kleckner, a ReMax agent who works with Stanton, said that the most expensive unit in the building, a 1,600-square-foot corner unit with windows on three sides, sold for $950,000.
Before the most recent Washburn sale, the previous record was set in June 2015 when a Twin Cities restaurateur sold his downtown Minneapolis home in the 39-story Carlyle building for $1,200 per square foot, or $4.3 million cash, also without ever officially hitting the market.
One of the biggest, though not most expensive on a per-square-foot basis, happened in 2011 when the late Horst Rechelbacher paid $6.99 million for the top two floors of the Phoenix on the River condo tower across the Mississippi from the Mill District.
After celebrating his 70th birthday in the unfinished 18,000 square feet of space with champagne and snacks served on stacks of drywall, Rechelbacher finished roughly two-thirds of the space and left the remainder to be finished later as work space.
After Rechelbacher died, his 12,000-square-foot living space went on the market in July 2014 for $8 million, or about $700 per square foot. That was a record list price for a Minnesota condominium, but it was a bargain compared with units in New York City and other big cities.
The remaining, unfinished 5,898-square-foot space later sold for $2.2 million. Then, the 12,000-square-foot unit was divided into two units that are now on the market for $3.25 million and $3.98 million.
Such sales represent a dramatic turnaround for the area, which just a few decades ago was an industrial wasteland of abandoned rail yards and decrepit mill buildings. A n effort to remove the blight left the area with vast swaths of vacant land, which was slowly developed parcel by parcel in the 1990s. And the Stone Arch Bridge, which was commissioned by railroad tycoon James J. Hill to enable his railroad to expand west, hadn’t been used for decades and was blocked by chain link fences.
The bridge in 1994 was converted into a pedestrian walkway that connects miles of riverfront trails. Ruins of the old mill infrastructure have been excavated to highlight the history of the area.
Now, the area is known for its world-class architecture, including French architect Jean Nouvel’s Guthrie Theater, the Mill City Museum by Minneapolis architects Meyer Scherer & Rockcastle, and the Humboldt Lofts by Julie Snow , who has won several national design awards.
Peggy Lucas never doubted the area’s potential. After developing a successful townhouse project across the river, she and her partners, Dick Brustad and Linda Donaldson, launched the Mill District redevelopment by converting the North Star Blanket building into high-end lofts. When she hired consultants to help determine pricing for the project, they told her buyers would only be willing to pay $100 per square foot.
Turns out that buyers were willing to pay far more, and Lucas credits Penny and Mike Winton, who were the first owners of the Washburn penthouse, and the late John and Sage Cowles , who were the first owners of the unit below, for inspiring others to invest in the area. The Cowles unit sold almost two years ago for $3.5 million — nearly $1,000 per square foot — without hitting the market.
“The pioneers who got in here first did really well and I’m happy about that because they took the risk,” Lucas said. “If it’s location, location, location, this is ground zero. This is a one of a kind.”
Jim Buchta • 612-673-7376
“[Clients are] willing to pay a premium for these signature properties.”
Cynthia Froid of Keller Williams Realty Integrity Lakes