Minnesota Lawyer
The St. Paul Port Authority plans to sell its shuttered downtown Macy’s property to a subsidiary for $1, clearing the way for a joint venture partner to swoop in and bankroll redevelopment at the site.
Having received its board’s approval Tuesday, the agency will pass the 500,000-square-foot property — including 360,000 square feet of space plus a parking structure — to Capital City Properties, a nonprofit offshoot that since 1991 has handled joint development efforts.
Port Authority officials have been in talks with a handful of developers including Edina-based Frauenshuh Commercial Real Estate Group, agency spokesman Tom Collins said. Talks with Frauenshuh recently cooled, he said, declining to name other prospective partners.
A Frauenshuh representative did not immediately respond to requests for comment on its interest in the property, nestled in the heart of downtown St. Paul between Cedar, Wabasha, Sixth and Seventh streets. The property sits less than two blocks from the Green Line’s Central Station stop.
Despite the Port Authority’s confirmation of joint venture negotiations, its first choice for the property is to unload it in a one-off sale to a developer. An outright sale would still be possible if the site falls under Capital City ownership.
“Both options are still on the table,” Collins said, noting that the routine ownership change would streamline deal-making in either case.
Since it paid $3 million for the boarded-up department store in February 2014, the Port Authority has fine-tuned a plan to upgrade and retrofit the space to accommodate a variety of retail and other tenants.
In April, a developer that has done extensive work for Walgreen Co. agreed to buy a two-floor, 25,000-square-foot slice of the building for $2.5 million — a play the Port Authority said at the time would help draw other tenants.
Officials from the Minnesota Wild hockey team have also spent months locked in negotiations to potentially put a practice space on one of the building’s upper levels.
Jamie Spencer, the Wild’s vice president of new business development and assistant to the team’s chairman, said earlier this month that team officials speak “pretty much daily“ with the Port Authority. The parties are working to resolve unspecified contingencies, Collins has said.
The Port Authority aims to have an agreement in place later this year to sell a building full of tenants to a private developer, or form a joint venture. Collins said he doesn’t expect any new tenants to surface in the near future, but a “major chunk” of the building should be under contract before 2016.
St. Paul officials, including Mayor Chris Coleman, say the project is an economic development engine in line with the city’s wide-reaching push to boost its profile. So far, St. Paul has taken on a number of transformative projects and infrastructure upgrades, including the Green Line.
Coleman singled out the Macy’s redevelopment in his State of the City address this spring, calling it a can’t-miss opportunity to rejuvenate St. Paul’s downtown core.
