A building in Rochester sets record for Minnesota's most expensive apartment sale

The 350-unit Berkman Apartments in Rochester fetched $536,000 per unit — a record amount for an apartment building in Minnesota — after a bidding war among investors from around the world.

CBRE Investment Management paid more than $187 million to the Berkman's developers, Kayne Anderson Capital Advisors and Alatus, the firms said Tuesday.

The 14-story building opened in 2020 across the street from the Mayo Clinic's St. Marys campus and less than a mile from Mayo's downtown campus.

Robert Lux, CEO of Twin Cities-based Alatus, said that although it was always part of the plan to sell the building after completion, the sale was somewhat bittersweet.

"It really is a special building," Lux said. "Building a building of that size outside the [Twin Cities] metro is not an easy task."

The project, Lux said, has construction elements, amenities and design features that many don't. That includes energy-efficient electric heat-pump technology, recycled low-flow plumbing fixtures and sustainable building materials.

The building is also unique in its unit mix. While it includes traditional apartments and a handful of walk-up, street-level townhomes, it has 73 short-term rentals that are aimed at recreational travelers and Mayo patients and families.

"This is the first project I've worked on that received true international interest," he said. "We received several very competitive market bids."

Gunderson said that in addition to the building's prime location, its unique unit mix and top-shelf, hotel-style amenities helped make it a plum target. The building has a rooftop entertainment lounge, a sports suite with a golf simulator, pet spa and a rooftop pet lawn that's heated and irrigated three times a day.

"It really is a masterpiece," he said. "It has every bell and whistle."

Construction began in 2017 on a 2.77-acre site. Lux said the project was fully leased within a year of completion and that the building remains nearly full.