The easily distinguishable Spruce Tree Centre mixed-use building, with its green tile-looking exterior has been sold for $2.75 million. The buyer is Spruce Tree Centre LLP of which St. Paul-based MetroPlains Development Inc is the managing partner.
The cash sale closed last month. The seller was Bradley Real Estate Inc., Boston.
Not only was MetroPlains Development. a developer of affordable multifamily housing, looking for a new home, but it was searching for a building that officials believed would be a good, sound investment.
Despite being just 78 percent leased, MetroPlains officials claim that with the right guidance the five-story, 145,000 square foot building can live up to its full potential— especially since the Twin Cities office market has picked up. And they say the building, located in St. Paul’s Midway area, will be repositioned to include more office and less retail.
The building, at the busy intersection of Snelling and University avenues, was built in 1988 in the midst of the real estate downturn. "We have a chance now - being a new owner and having cash to invest - to bring it to its full potential:’ says Lawrence Olson, a principal at MetroPlains.
Partners plan to invest about $1 million in improvements to the building.
"Spruce Tree is clearly not operating at market and it can be" Olson adds "We saw all the ingredients to bring it up to market and full occupancy. We think it’s a good home and a good investment for us"
MetroPlains and an affiliate, Garsten Management Corp., which will manage the property, will occupy 6,000 square feet on the second floor Build-out is under way, and the firms plan to move in Dec. I. MetroPlains is currently leasing 4,000 square feet at Court International, 2550 University Ave.
"Our initial motivation was to relocate our offices to a permanent location, since we were expanding and running out of space:’ Olson says. "And we had a strong interest in staying in St. Paul. "The firm looked at more than 30 buildings before deciding on Spruce Tree.
MetroPlains plans to reposition the building by changing the tenant mix to include more office and less retail. The first floor was originally designated for retail use, hut many of the shops have closed. "Some destination retail works" Olson says, "but most will be used for office and service"
The partnership has hired architect Pope Associates Inc., St. Paul, to study the first level and make recommendations The partners plan to spend between $100,000 and $150,000 on common space amenities.
The office has been good there, says Dave Gontarek, a project manager at St. Paul’s Department of Planning and Economic Development. "It seems to be more of an office building than a retail. You can see some vacancies along the University side because retail has never caught on" Although, he adds that Applebee’s Neighborhood Grill & Bar and a handful of destination retailers do well there.
Gontarek is confident in MetroPlains’ ability to give the building a shot it the arm. "It’s always positive when you have local owners who office in the building:’ he says. ‘You know it will be managed well"
MetroPlains will market the building’s larger spaces, 5,000 to 15,000 square feet, to non-profit organizations or quasi-governmental agencies that don’t need to be in downtown St. Paul, Olson says. The 1,000 to 4,000 square foot spaces will be marketed to smaller users, like attorneys, doctors and chiropractors.
The largest available block is 12,000 square feet. Rents are running $13.50 a square foot gross.
The building includes a 354-car parking ramp and a small adjacent surface lot. The ramp was publicly financed and is owned by the St. Paul Housing and Redevelopment Authority. The city has transferred necessary documents to the new owners to allow them to operate the property, Gontarek says.
Down the road, the city might help reposition the building and do some leasehold improvements. "Once they line up tenants, if it will increase the tax base and add services to the neighborhood, we may help with potential loans to lease it up." Gontarck says.
He says with the new Midway Marketplace shopping center scheduled to start construction later this month, the entire Midway area has a lot of possibilities.
St. Paul City Council Member Roberta Megard agrees: "The market is there. The investment is coming. I believe it’s just a matter of time."
Spruce Tree, she adds. is a key building on the corner, and she says MetroPlains appears enthusiastic about its potential. "We hope to provide a little new blood there to get a business association under way" she says. "There needs to be a proactive effort to market the buildings along University." |
