Conversion of post office nears completion

A historic U.S. Post Office building on St. Paul’s downtown riverfront is right on schedule to find new life as an upscale apartment and hotel complex this summer, but other aspects of the project — including a ground-level restaurant — will take more time.

The apartment portion of the Custom House project, spearheaded by St. Paul-based Exeter Group, began welcoming residents a few weeks ago. Tenants have moved into roughly 50 of the 202 units at 180 E. Kellogg Blvd., but the developer said it has more than 110 leases on file.

Strong early interest in the $120 million-plus project has so far outmatched expectations. Exeter principal Jim Stolpestad predicted the property would hit 90 percent occupancy by fall.

“We’re ahead of where we thought we’d be,” he said. “We’re entering the phase where people are starting to notice that it’s there.”

An adjoining 149-room Hyatt Place hotel is on track to wrap construction in July, with an opening set for August, Stolpestad said. The rooms will feature 13-foot windows with downtown views, adding to a growing crop of midmarket lodging options in the city.

St. Paul Mayor Chris Coleman lauded Custom House in his State of the City address last month, signaling its role as a driver of continued downtown growth. He has previously touted the project as a milestone for the Lowertown neighborhood, home to an onslaught of residential development in recent years.

The development sits across the street from Union Depot, the eastern endpoint of the Green Line light rail route. Transit access is a selling point for the area, hailed by both the city and developers as a project catalyst.

Exeter also plans to open 200 publicly available storage units adjacent to its main property next month.

Sometime after that, Exeter plans to settle on a restaurant to fill 5,500 square feet of ground-level space at the corner of Kellogg Boulevard and Jackson Street.

The developer has about a half-dozen “serious prospects,” but recent Kellogg Boulevard roadwork has complicated the marketing process, Stolpestad said. Still, for Exeter, the eatery is secondary to the residential and hotel components of the project.

“Frankly, we’re in no rush to do that,” Stolpestad said, noting that the surrounding neighborhood, flush with new development, is a budding destination. “There’s no shortage of new restaurants going into Lowertown. We’ll eventually find the right partner.”

Exeter expects to firm up restaurant plans in the next six to nine months. If no restaurant is willing to move into the relatively expansive street-level space, the developer could subdivide it to make room for a second use.

Meanwhile, the project is the first and biggest player in an ambitious plan to build a 1.5-mile walkway on the eastern edge of downtown, roughly between the Science Museum of Minnesota and Union Depot – just across the street from the Custom House.

City planners will rely on public and private partners to realize the River Balcony. Exeter agreed to lace the pathway through the second floor of the Custom House, with a link to Union Depot, but to date there is no design or committed financing.

Stolpestad has estimated a bare-bones walkway would cost at least $1 million on top of the price of building out the rest of the second floor.

“What’s really going to have to happen there is that somebody is going to have to come up with some money to kick that off, and whether it’s private money or public money or a combination remains to be seen,” he said.

Like the restaurant space, the River Balcony is not a key factor in the project’s overall vitality. The second floor could sit as-is for five or 10 years without hurting Exeter, Stolpestad said, though he expects to see some movement toward a plan within a year.

Still, while some elements of the redevelopment remain uncertain, the nuts and bolts of the project are firmly in place — on time, and on budget.

“In all respects, this has gone pretty well — especially for as big a project as it is,” he said.

Staff photographer Bill Klotz toured the space: [portfolio_slideshow id=71523]

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