St. Paul First National Bank building owner selling downtown office portfolio

Downtown St. Paul’s largest property owner is seeking a single buyer to purchase its six office buildings, two parking ramps and a nearby restaurant, a transaction encompassing 1.6 million square feet of office space that has the potential to transform the capital city’s central business district.

The space Madison Equities is marketing is in some of St. Paul’s most recognizable high-rises, including the historic First National Bank Building. Madison’s owner and longtime driving force, Jim Crockarell, died in January, leaving the properties to his wife, Rosemary Kortgard.

“I have not talked to anybody that has come up with another example of where you could, in a major U.S. city, buy a third of a downtown area in one transaction,” said Steve Lysen, first vice president for broker CBRE. “This is a super unique, once-in-a-lifetime opportunity.”

In addition to the First National Bank Building, the listing includes downtown’s Alliance Bank Center, 375 Jackson Square, the U.S. Bank Center, the Empire Building and Endicott Arcade, Park Square Court, the Stadium Ramp and the Capital City Ramp. The building that houses the Handsome Hog and an adjacent surface parking lot in the Cathedral Hill neighborhood are also for sale.

According to an offering memorandum, the portfolio does not have a formal asking price, and cash offers are encouraged. The total assessed value of the 10 properties is almost $90 million, according to Ramsey County records.

Madison Equities will consider offers for a portion of the portfolio or individual buildings. But Lysen said the company is hopeful of a single buyer “rather than just selling it to eight different people and having them all compete with each other for the cheapest office lease.”

“We’re trying to find somebody that will roll up their sleeves, buy the entire portfolio, build a hotel, do some conversions, do some creative things to fill up the space — and maximize the value for the community, get bodies downtown, create tax base,” he said.

The offering comes at a challenging time for commercial real estate, which is seeing record office vacancies, declining building values and limited demand.

The overall vacancy rate in St. Paul’s central business district at the end of March was 27%, according to a quarterly report from Cushman Wakefield, a brokerage that tracks mostly larger, multi-tenant office buildings with 20,000 square feet or more. That’s one of the highest vacancy rates for a subdistrict, but on par with the metro average.

There have been few office building sales downtown in part because investors are having trouble getting financing at a time of declining values. One of the largest — and most recent — was Sherman Associate’s purchase of Landmark Towers, which is being converted to housing.

Civic leaders are uniting around a new downtown strategy that lays out priorities for investments, including a plan to encourage developers to do more office-to-residential conversions.

“This cluster of buildings is in such a key location,” said Joe Spencer, president of the nonprofit St. Paul Downtown Alliance, which published a 117-page report on the issue in March. “If we can transition away from being an exclusively 9-to-5 business district into a 24/7 mixed-use district that has residential and commercial uses — that has people coming and going at all hours of the day, with a diversity of users — that’s really a great thing for downtown.”

Spencer added that state and local assistance will be needed to kickstart conversion projects. The report suggests the city explore tax-increment financing, ways to streamline the permitting process and a possible acquisition fund for buildings that don’t drum up market interest.

Improvements to downtown streets, sidewalks and parks could also help increase the attractiveness of the properties, said City Council Member Rebecca Noecker, who represents the area.

“I want to be strategic and working with our partners to make sure that whatever happens with this deal, we end up getting the best thing for the city,” Noecker said. “I think all of downtown is going to depend — increasingly, in the future — on better public-private collaboration.”

Crockarell, who grew his St. Paul portfolio over decades, was a controversial figure in the downtown ecosystem, at times clashing with the city, labor unions and other property owners.

The four office buildings in use are all roughly half occupied, according to the memorandum. The Empire Building was placed on the city’s vacant building registry in early 2023.

Crockarell had planned to turn the Park Square Court building, near Mears Park, into a boutique hotel belonging to Marriott’s Tribute portfolio. Financing never came together, but the site is “shovel-ready” for a future developer, Lysen said.

Ideally, he added, Kortgard would sell the downtown portfolio by the end of the year.

Though CBRE just started spreading word of the listing Tuesday, it’s already attracting national attention. Lysen said he and his business partners, Chris Gliedman and Mike Marinovich, plan to start sending the information to “a huge number of people all over the world” starting Wednesday.

“The person that we’re looking for is a unique person,” he said. “There aren’t that many of them around. So we’re going to tell the story to anyone that will listen, and hopefully we can find the right fit for a buyer.”

Staff writer Jim Buchta contributed to this report.