print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Sherman to Start on $44M 'Vicinity' in March

The Vicinity Will Rise at 205 Park in Downtown Minneapolis
February 23, 2018
As soon as the ground thaws, Sherman Associates will begin work on The Vicinity, a new six-story building in downtown Minneapolis’ Mill District that will include 122 units of housing, a police substation and two new ventures by prolific restaurateur Kim Bartmann.

The Minneapolis-based developer and apartment operator is planning for a March start.

The first spade in the ground will mark the end of the city’s tortuous 26-year effort to redevelop the 0.83-acre site at 205 S. Park Ave., which it acquired in 1992 as a part of its purchase of the Milwaukee Railroad depot. The project is Minneapolis-based Sherman’s second crack at developing the site, which is currently a surface parking lot, and the third development to be proposed since 2001.

The site is in a prime location, just one block south of the Mill Ruins Park which runs along the banks of the Mississippi River and one block west of the renowned Guthrie Theater. Nevertheless, previous efforts fell flat after financing failed to materialize, said Emily Stern, senior project coordinator with the city, and by 2008 the city was back to square one.

"The real estate market wasn't doing well, so we decided it wasn't a good time to put the property back out there," Stern said, adding that the city is "thrilled" that the current proposal is moving forward.

"It's an exciting project," Stern said. "We like that they're committed to affordable housing and they're doing it without a city subsidy. That's a big win."

In addition to being mixed-used, the building will be mixed-income and include both rental and condo units. Plans call for four, two-story townhome units for sale and 118 rentals, 20 percent of which will rent at rates affordable for those making 60 percent of the area median income (which stood at $90,400 for a family of four in 2017, according to the Metropolitan Council). The remainder will lease at market rates.

The Vicinity has been in the works since August 2016, when the city once again awarded Sherman exclusive rights to the site. The developer paid the city $3.25 million for the property in a deal that closed on Tuesday, which also happened to be the deadline established by the development agreement.

"At the end of the day, we hit the deadline. It took us a little longer but we did get there," said Shane LaFave, Sherman’s director of multifamily development. "We hope that gives the city further confidence in us."

Getting backing for the project was challenging due to The Vicinity's complexity and contamination at the site, LaFave said.

"We had to get conventional financing and then went through multiple rounds of clean up grants. We didn't get all the cleanup funds we wanted, but it was close enough," LaFave said.

As time went on, the project's total development costs also ballooned, swelling from about $35.9 million to $44 million, largely due to increases in construction pricing, LaFave said.

In spite of these setbacks, Sherman pulled it out of the pocket and now has its building permits in hand. If all goes well, The Vicinity will be ready to let by summer of 2019.

Hopkins-based Frana Cos. is the general contractor. The building was designed by ESG Architects of Minneapolis.

Apartments at The Vicinity will include 30 studio units, 39 one-bedroom, 12 one-bed plus den floorplans and 37 two-bedrooms, according to LaFave. The rentals will range in size from 550 to 1,434 square feet. At present, Sherman plans to charge $245 per square foot for the market-rate apartments, though that could be subject to change, he added.

The walk-up townhouses will range in size from 1,200 to 1,900 square feet, and most likely sell at $400 per square foot.

LaFave said The Vicinity will include a number of amenities for residents such as a large community room on first floor, fitness center, an interactive sports simulator, a courtyard with grill pits and green space, and a sixth-floor indoor and outdoor dining area with a full kitchen that can be rented by residents who wish to host large parties there. The building will sit atop two levels of underground parking.

One wildcard is Bartmann, who has not yet disclosed the specifics of her upcoming concepts to Sherman, LaFave said, though it is known that one will be a sit-down restaurant and the other will be a bakery and cafe.

Bartmann is the brains behind a robust portfolio of Minneapolis restaurants and entertainment venues that include the French bistro Barbette, Pat’s Tap and Bryant Lake Bowl, to name a few.

Bartmann could not be reached for comment.

"She's still working on [the new concepts]. We're pumped for what she’s going to bring," LaFave said.

In addition to the police outpost, the building will also be host to an ATM vestibule run by a local bank, which has not yet been named.



Clare Kennedy, Minneapolis / St. Paul Market Reporter  CoStar Group   
GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News