Opus Northwest in Minnetonka, the developer hoping to put a $200 million office, hotel and housing project on prime riverfront real estate in downtown St. Paul, has given up its exclusive rights to the property. Citing the economy, it canceled the $10 million deal with Ramsey County for a six-acre site along Kellogg Boulevard that contained the old West Publishing complex and the adjacent vacant county jail. The developer forfeits a $125,000 deposit and the county is allowed to put the land back on the market.
Opus Northwest had proposed a 22-story office tower with up to 500,000 square feet of space and a 30-story tower with room for a 250-room hotel and 100 condos. The developer could not find a company to anchor a planned office tower, which is something they required of themselves to start the project. Although it no longer has exclusive rights, Opus intends to continue to market the property.
Part of Opus' challenge in landing an office tenant is because Saint Paul typically has had one of the Twin Cities' softest markets. A recent report released by Bloomington-based NorthMarq put St. Paul's midyear vacancy rate at 25.7%, compared with 15.4% for the Twin Cities overall. The project above the Mississippi River would have given St. Paul its first new office tower nearly ten years and significantly increased Class A office space.
Downtown Saint Paul has only 1.6 million square feet of Class A space, compared with 13.2 million square feed in downtown Minneapolis, according to figures compiled by Colliers Turley Martin Tucker. A recent report by St. Paul's Building Owners and Managers Association said that for the past two years the amount of office space downtown has declined, mainly because so many older office buildings have been converted to other uses, such as housing.
Ramsey County officials are still hopeful that the property will be bought by another developer. For years, the aim of the county has been to unload the property and get it back on the tax rolls instead. In the meantime, the county has been working to relocate about 600 workers in the old West building in case there is a successful sale. Having the buildings vacant may make it more attractive to developers once the economy improves.
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