North Loop mixed-use project with 36-story apartment tower clears historic preservation hurdle

One of the biggest mixed-use projects in the Twin Cities development pipeline received a nod last week from the Minneapolis Heritage Preservation Commission (HPC).

Houston-based Hines wants to build North Loop Green, which is to include a 36-story apartment tower with 450 rental apartments and a 14-story, 339,000-square-foot office tower on the west edge of downtown Minneapolis.

The HPC voted 6-1 in favor of the project, which would also include 21,400 square feet of retail space and nearly 500 enclosed parking spaces on a site that was mostly several surface parking lots adjacent to Target Field and a busy transit hub that serves several commuter rail lines.

It's the third and final phase for a 6-acre parcel acquired by Hines in July 2012 for $13.7 million. The site is bordered by N. 5th Street, N. 3rd Avenue, Washington Avenue, the Northstar Rail Line and the Cedar Lake Trail.

The HPC presentation was the second for Twin Cities-based ESG Architects, which plans to relocate its offices to the new building from its current home in the Mill District neighborhood.

Aaron Roseth, principal and president for ESG, also revealed that the project will include about 100 short-term VRBO-style rentals.

The project will bring an unusual structural element to the Twin Cities: a full-floor bridge that will connect the 17th floor of the apartment tower and the 14th floor of the office tower.

Roseth said the bridge will house 5,000 square feet of indoor and outdoor space for a restaurant and/or bar. There will also be a rooftop gathering space and 15,000 square feet of restaurant and retail space on the plaza level.

In addition to the bridge, several other "connections" of various sorts, including a park, paths and a "grand staircase," will make it easier for pedestrians to move from downtown to the North Loop.

The HPC vote was a critical first step for the project, which is within the Minneapolis Warehouse Historic District and is subject to design guidelines that limit the height of buildings in the area to nearly half of what has been proposed.

Because the project was initiated before adoption of the city's new 2040 comprehensive plan, it is not subject to an inclusionary zoning rule that requires developers to include income-restricted units for new buildings of a certain size.

"Height was biggest obstacle," said Roseth. "That was the biggest issue."

The HPC approval will enable the developer to submit an application to the planning commission, likely in January, Roseth said, before a public hearing.

The site is considered a key link between downtown's Central Business District and the North Loop neighborhood that's just to the west.

With a record 6,000 new rental units opening this year and even more slated in the coming years, according to a third-quarter report from Marquette Advisors, such developers are doubling down on distinctive sites and amenities aimed at differentiating their projects.

During 2019, downtown Minneapolis alone is expected to get 1,000 new rentals and then nearly three times as many additional units over the next two years.

Mary Bujold, president of Maxfield Research, a Twin Cities-based firm that conducts feasibility studies and market research for developers and others, said that while many of the projects that have been built in that area have not done quite as well as some, that's beginning to change.

"I think that the area is perhaps starting to come into its own," she said.

Bujold said that while short-term rentals aren't new to this market, there haven't been enough yet to gauge their impact on traditional renters.

"Effective management is the key to the success of combining that many short-term rentals with long-term rentals," she said.

Access to several transit options, particularly LRT and commuter rail, has proved to be attractive to renters, she said. And apartment projects that include offices are still relatively rare in the Twin Cities.

"That is more like a Chicago project, but I would definitely like to see that type of concept be developed in the North Loop," she said. "I believe that it is time."