Sherman Associates returns to Thrivent block

Sherman Associates returns to Thrivent block

By: Matt M. Johnson July 2, 2019 2:54 pm 0

Almost a year after pulling the plug on an apartment and hotel project next to Thrivent’s new headquarters in downtown Minneapolis, Sherman Associates is back with a bigger apartment building featuring unique burn rehab space on the second floor.

Minneapolis-based Sherman plans to build about 190 market-rate luxury apartments on the southern half of a block bounded by South Fifth Avenue, Sixth and Seventh streets, and Portland Avenue. The developer previously proposed a 150-unit, 12-story apartment building; a 122-room, nine-story hotel, and a two-story building housing a day care and a fitness center at 517 Sixth St. S.

Sherman stepped away from the $68 million project when it determined that it would be unable to attract a hotel brand to the hotel property, said Shane LaFave, Sherman’s director of multifamily development.

“The hotel really was dragging that one down a little bit financially,” he said in a Tuesday interview. “There are too many good flags and brands spoken for downtown.”

Hoteliers have added about 2,500 new hotel rooms in downtown Minneapolis since 2013, according to Tennessee-based STR, which studies the hotel market.

The day care center is part of the new plan and would be housed in 14,000 square feet on the ground floor. There will also be ground-floor space for a fitness facility and a restaurant or coffee shop, LaFave said.

New to the proposal is a 14,700-square-foot transitional burn recovery center that would be operated by Champlin-based Firefighters for Healing. The organization’s space would provide 12 apartment-like suites to house burn victims being treated at nearby Hennepin Healthcare, as well as their families, said Chris Dunker, the nonprofit’s vice chair. Hennepin Healthcare is a regional center for burn treatment.

Firefighters for Healing had been planning a standalone facility, but realized going with a floor at Sherman’s apartment building would allow it to be close to the hospital and affordable, he said in a Tuesday interview. The nonprofit will spend about $6 million to own its floor in the building.

“With a billion-dollar stadium across the street there’s not a lot of land available for an affordable price,” Dunker said, referring to the Minnesota Vikings’ U.S. Bank Stadium.

The Firefighters for Healing space would also include office and conference space for the organization. The nonprofit is also advocating to Hennepin County officials to build a skyway connection between Sherman’s planned apartment building and Hennepin Healthcare, Dunker said. That connection would have to span a full block of surface parking to reach the hospital and would likely be affected by future redevelopment of the lot, he said.

The connection would provide another skyway link to the U.S. Bank Stadium, LaFave said.

Sherman plans to submit a development application to the city this fall. Vertical construction could start a year later. If all goes according to plan, the building would open in 2021, LaFave said.

Sherman could have gone with an even taller, denser apartment building since the developer is planning to frame the apartments with steel. But Sherman has found that buildings with 200 apartments or fewer fully lease in about 12 months, which is optimal for the developer, LaFave said. Sherman’s new East End apartments at 240 Chicago Ave. leased in about that amount of time. Those apartments have a level of finish and amenities similar to what is being planned on the Thrivent block, he said.

Developers are expected to open about 2,800 new apartments this year in downtown Minneapolis, according to Golden Valley-based Maxfield Research. The vacancy rate for downtown apartments is 7.6%, according to the most recent Apartment Trends report from Marquette Advisors.

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