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LA Company Acquires IBM's Sprawling, 3.1 Million-SF Campus in Rochester, MN

Industrial Realty Group Plans to Turn 490-Acre Site into Mixed-Use Development
February 26, 2018
Los Angeles-based Industrial Realty Group (IRG) has finalized a deal to purchase IBM's sprawling corporate campus in Rochester, MN, which dates back to the 1950s and was designed by famed architect Eero Saarinen, who also designed the Gateway Arch in St. Louis.

IRG did not disclose the price or other terms in acquiring the entire 490-acre site at 3605 Highway 52 N, which includes 34 existing office buildings, manufacturing facilities, warehouses, data center and laboratory space totaling more than 3.1 million square feet. The new owner plans to turn the campus, which has been occupied by IBM since 1957, into a "dynamic, mixed-use multi-tenant" development, according to a release.

"Utilizing our nationwide network, we have already engaged many potential tenants who are interested in locating their operations to this high-tech campus," said John Mase, CEO of IRG, a real estate developer and investor that operates a 100 million-square-foot portfolio in 28 states through its affiliated partnerships and limited liability companies. "IRG plans to create an environment that encompasses a variety of uses and creates as many jobs as possible."

It is not clear what precisely that may mean for all the existing buildings, though IRG said IBM has signed a long-term lease for eight buildings on the east side of the site. Executives at IRG and IBM could not be immediately reached for comment on Monday. Sales documents had not yet been filed with Olmsted County, according to the recorder’s office.

The sale was foreshadowed by a move to replat the 18-parcel campus into just three parcels and rechristen the area "Rochester Business Park," which was approved by the Rochester City Council in November 2017. The measure was initiated by Mark Carlson, a real estate strategy and operations manager for IBM.

All documents associated with the measure omitted its ultimate purpose. A neighbor who asked what may happen at the site was told by council members to discuss the matter off microphone with a representative of the St. Paul engineering firm SEH, who spoke on behalf of Carlson at the meeting.

IBM was the third-largest payer of property taxes generated by commercial buildings with properties that had a combined value of $55.3 million, according to 2018 budget presentation presented by the city of Rochester.

A search of Olmsted County property records for all 18 parcels associated with the IBM campus showed a collective value of $53.5 million for taxes payable in 2018.

Please refer to CoStar Comp #4147992 for additional information.
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