Developers share their thoughts on making projects work in tough times
Things might be less than ideal for developers these days, but don’t tell the folks at Greco Real Estate Development. They didn’t get the memo.
The firm recently finished Blue, a 242-unit, five-story apartment and retail complex at 2900 Aldrich Ave. S. and is pushing forward with another five-story, 100-unit residential project planned for 2900 Lyndale Ave. Blue is already 60 percent leased, said Greco Vice President of Development Brent Rogers, and the firm is confident there will be demand for the new place, which is intended for local artists.
“This will be an artist and creative-worker community that is really a niche market,” Rogers said.
Despite the times, some developers have been able to make their visions a reality, though the end result isn’t always what they had in mind at the start.
Blue, for instance, was originally planned as a condo complex and the Greco building proposed nearby was first pitched, and approved by the city, as office space.
“The market we thought was there for professional offices just didn’t prove out to be,” Rogers said.
Curt Gunsbury was faced with a similar problem when the financing didn’t work out for a boutique hotel he planned to build at Lake Street and Holmes Avenue, so he also went the route of apartments. The project, named Solhem (that’s “sun home” in Swedish), is now a nearly complete 60-unit, six-floor apartment building. It’s set to open in September.
“I think we really made the right move,” Gunsbury said. “I think apartments really work well in Uptown and this building definitely fits the residential character of the neighborhood and as a business model it just seems a lot more secure.”
He said an upside to the down economy is that construction costs are down. He said he was able to get the project done ahead of schedule and under budget, with enough cash to add some things he didn’t think he could afford, like heated bathroom floors.
But to get a project off the ground in the first place requires a sizeable loan, something banks aren’t dolling out as they were during the condo boom a few years back.
Stu Ackerberg, chief executive officer and owner of local development firm the Ackerberg Group, knows firsthand the challenges of finding a lender willing to take a chance on a big project. He’s been at it for years in an attempt to get started on Mozaic, a huge residential, office and retail project planned for Lagoon and Fremont avenues.
Mozaic has been through several evolutions, most notably changing its residential component from condos to apartments. But so far, the project hasn’t convinced a lender to throw down the cash.
“The hurdle is that most lenders are not actively doing real estate loans … Everyone is just being ultra, ultra conservative,” Ackerberg said.
Because of the dip in construction costs, he said the price tag for building Mozaic would probably be less than initially anticipated. But the project’s start date, which for years was set and missed, is for the moment nonexistent.
“All you can do is trust the universe, because just imagine if we were able a year and a half ago to figure out financing for Mozaic as condos,” Ackerberg said. “Right now we would have had the coolest condos you’ve probably ever seen coming online and in a market like today, it would have been a total disaster.”
Reach Jake Weyer at 436-4367 or [email protected]
Solhem, a 60-unit apartment building at Lake Street and Holmes Avenue, is expected to open in September.