Problem Property

CCIM uses creative repositioning strategy to sell vacant building.

By Carolyn Bilsky

After a year of marketing an older, vacant, 65,000-square-foot office building in downtown Minneapolis to call centers and technology hubs, Aaron Barnard, CCIM, a broker with Northstar Partners in Eden Prairie, Minn., knew it was time to rethink the sales strategy. “Investors simply didn’t have an appetite for the Minneapolis market -– and particularly an aging office property that reported zero occupancy,” he says.

The General Services Administration had vacated Bridge Place moving two of the three offices in the building to non-central business district locations. It appeared unlikely that any office users would show interest in the property and it became clear that office space wasn’t necessarily the best use for the property. “Given the growing popularity of downtown residential redevelopment in the Minneapolis market at the time, we redirected our strategy [in that direction],” Barnard says. “Following considerable research and meeting with the city to verify the potential of the site in terms of height and density, we began marketing the site to local residential developers with a pre-approved residential plan that demonstrated the potential of the site.”

Once developers were aware that the city had approved the project and the building was outside the height-limitation district that surrounds some of the Mississippi River, they “began to circle,” according to Barnard. The same property that had been so undesirable as an office building soon had several buyers in a bidding war.

“We were able to sell the site on a ‘best and final offer’ basis. Today, the former Bridge Place site is home to the Carlyle, a 39-story, 255-unit luxury condominium project overlooking the Mississippi River,” Barnard says. The project almost is complete and will be ready for occupancy before the end of the year.

Even though the project was challenging, Barnard says he would look forward to the opportunity to tackle another one like it again. “I truly enjoy the challenge of a unique project … repositioning, rebranding, or completely rethinking a project is where the most value is derived. As times change, so can the highest and best use of many properties.”

Carolyn Bilsky is associate editor of Commercial Investment Real Estate.