Uptown's Financial Freedom Realty shifts focus from condo conversions to company expansion
Uptown real estate entrepreneur Clark Gassen has built a name for himself converting apartment buildings to condominiums.
Gassen has converted roughly 300 units throughout Southwest since starting Financial Freedom Realty Services in 2003 and about 100 are still underway.
They will be the company's last, however, said Gassen, who also runs his own development company, CAG Development.
Citing a slow market and the bad rap attached to conversion projects because of other developers' poor work, Gassen said he would not pursue more conversions. Instead, he wants to focus his efforts on planned new developments and the expansion of Financial Freedom, which he said offers buyers an alternative to “big red and big blue,” or Edina Realty and Coldwell Banker Burnet.
Gassen said the goal of his conversions has always been to bring homeowners back into the core of Uptown. His supporters say he's accomplished that goal, creating affordable housing that hardly existed in the area until a few years ago. Opponents say he's pushed out renters and saturated the market with condos that many can't afford.
For better or worse, Gassen's conversions, which used to be his top priority, have reshaped the housing market in Southwest and helped build Financial Freedom.
Gassen is confident his growing brokerage is poised for success on a larger field dominated by corporate players.
A new direction
A hot market drove real estate sales for years, but things have cooled off in recent months.
“The real estate market in general has adjusted itself,” Gassen said. “It's not flat, it's not a bubble - it's just back to normal.”
The normal market has made selling Financial Freedom's large number of newly converted condos a bit of a struggle during the last year, Gassen said, and a poor public image of conversion sites hasn't helped.
“There's a lot of people doing condo conversions that don't understand the process,” he said of developers who have tarnished the reputation of all converters. “Guys doing less quality work (than Financial Freedom).”
Financial Freedom will complete underway conversions, Gassen said, and the company will continue to grow without pursuing more.
The brokerage has been hiring eight to 12 real estate agents a month. The staff of about 70 agents should grow to around 100 - the number the company's new building at 1300 Lagoon Ave. was designed to accommodate - by the end of the year, Gassen said.
He wants to expand real estate services beyond Southwest, possibly into Downtown or Edina, but the next move hasn't been decided yet.
Gassen said he doesn't want to go head-to-head with the big brokerages but hopes his company can secure a piece of the pie with its fun, personable “boutique” approach.
“I believe the buyer is sick of the corporate process,” Gassen said. “Buying a home or a condo is such a big decision in someone's life. It should be a fun experience.”
Gassen, whose development company has invested in several new residential and mixed-use buildings in Uptown, including the nearly completed Edgewater condominiums near Lake Calhoun, said Financial Freedom will sell new and units existing housing.
Bob Peltier, president of Edina Realty Home Services, said it would take a company of size to be successful in the larger market. During the past few years, anyone could sell in Minneapolis, he said. That's no longer the case.
Peltier said he's not too familiar with Financial Freedom, but knows of the company's slow sales at The Nicollet at 10th Street South and Nicollet Mall, where 48 of 357 units are sold and 65 are reserved, according to the Downtown Journal condo pipeline. The project is currently the only Downtown development Financial Freedom is selling.
“They thought they could just walk in thinking the market was what it was two or three years ago and it's not,” Peltier said.
Edina Realty recently took over sales of that project.
Gassen said he was unable to comment on the reason for the switch, but said it was a positive move for Financial Freedom and won’t hinder the possibility of expanding Downtown. His company is involved in several interviews at other sites Downtown, he said.
Michael Roess, founder and owner of Minneapolis-based real estate management and development firm iMetro Property, said he takes Gassen's aims seriously. Financial Freedom successfully penetrated the Southwest lakes market, which other companies have had difficulty doing, Roess said.
“He strikes me as someone who is aggressive and creative and successful at what he sets out to do,” he said.
Gassen said to be on the lookout for more of Financial Freedom's familiar red, yellow and black signs in the lawns of homes in Southwest and beyond.
Just don't look for them in front of apartments.
After the craze
When Financial Freedom's condo conversions are complete, the company will have added roughly 400 condo units to an area that a few years ago had virtually none.
Mary Bujold, president of real estate research and consulting firm Maxfield Research, said the condos give young people an alternative to existing housing that might not appeal to them.
“I think it was a perfect fit to make some units available at an affordable price,” Bujold said. “It offered a lot of people an opportunity to live in the area who don't want a single-family home.”
Don Horner lives happily in one of the new condos, near 43rd Street and Upton Avenue. The conversion of his building is nearly finished.
Horner bought his condo in August and said it was completely transformed from what it looked like as an apartment.
“It was a dump,” he said.
The building's units have new floors, countertops, walls, appliances and other furnishings. The building exterior has also been revamped.
Horner is among many new condo owners in Southwest who have taken the place of renters who couldn't afford to move into their converted buildings.
Caryl Anderson was one of them. She had lived in her apartment at 36th Street and Hennepin for about a year when she was forced out because of a Financial Freedom condo conversion.
The construction was disruptive and moving was difficult for her, she said, but not as hard as it was for some of her elderly neighbors.
City Councilmember Ralph Remington (10th Ward) has had numerous conversions in his ward and said the displacement of renters is unhealthy for the area. He has worked with City Councilmember Cam Gordon (2nd Ward) on an ordinance placing restrictions on conversions.
“It's catering to an elite and disregarding a segment of the population that can't afford to buy,” Remington said.
Displacing low-income residents creates pockets of poverty, Remington said.
He said Gassen has contributed to the glut of condos in the area and stopping conversions will benefit the community.
Gassen said he appreciates the fact that some renters blame his company for displacing them. Moving people from their homes is not something he is proud of, but creating affordable opportunities for homeowners in Southwest is.
“We're not going to please everyone,” he said. “But I'm very happy to be involved.”
Jake Weyer can be reached at 436-4367 and [email protected].