ST PAUL, Minn. — The City of St. Paul has the potential of adding nearly 4,000 new apartment/condo units in the coming years without breaking any new ground. That's according to a new report that scored 20 downtown properties based on their compatibility for residential conversion.
The Saint Paul Downtown Alliance commissioned the new Office to Residential Conversion Study, which was completed by Gensler, an international architecture and design firm that has handled conversion projects worldwide.
It found that half of those properties, 10 total, are prime targets for conversion.
"We've always speculated that there's some unique features to St Paul architecture that would be a competitive advantage for us," said Joe Spencer, President of the Saint Paul Downtown Alliance, which commissioned the study. "What the report did, was really verify that. Gensler has done this type of analysis for 1400 buildings across North America. On average, 30% of their buildings will score as a strong conversion candidate."
"Fully half of ours were scoring as a strong conversion candidate and then another 30% were medium candidates for conversion and only 20% were really poor."
Residential conversion projects aren't new to downtown St. Paul, but at a time when many large office buildings have been losing value and vacancies have grown, the report hopes to help provide a guide to potential developers.
"In downtown St. Paul, we've got two (conversions) under construction right now, the one right behind me (in the Ecolab University building) and Landmark Tower just a couple blocks that way," Spencer said. "We're hopeful that by providing this report to the market, we're going to help accelerate that conversion."
The buildings based on factors like the size of the floor plate and accessibility to windows, how easily the shape can be divided up into units and several other factors like accessibility to parking, plumbing and electrical.
If all 10 of the suitable properties were to be completed, the report estimated that nearly 4,000 new residential units could be added downtown St. Paul.
Spencer: "When you have that mix of users, where you have residents and workers and visitors all in one place, that's what makes for an exciting and vibrant downtown."
Kent Erdahl: "I've talked to developers who have said that it's not that easy because of how much money this costs in order to convert buildings. How do you get from, on paper, this can happen to a developer coming in and actually making that happen?"
Spencer: "So there's no question none of these are easy projects. That being said, what this report shows us is our buildings are actually more efficient to convert. We also know that there's going to be a (cost) gap on top of that. One of the big tools that we're looking for from the state is the (Conversion of Underutilized Buildings tax credit) what we call the CUB credit. It's an additional tax credit, a subsidy, that helps close that gap so that we can accelerate the conversions."
Building prices could also make the conversions more realistic. At a time when downtown office real estate has plummeted in value in the Twin Cities, five of the 20 St Paul properties are owned by Madison Equities, and have already been sitting on the market for months.
"Those buildings are going to fall in value until, at some point, the price is right and buyers are going to come in," Spencer said. "We've had that part of downtown, where Madison Equities properties are clustered - struggling - kind of in the center of downtown for a while. This moment is, I believe, our greatest opportunity for transformation in the last 100 years."
In the meantime, prices aren't the only thing that could come crashing down.
Erdahl: "Will there be, in your opinion, buildings that disappear from the skyline?"
Spencer: "That may well be a possibility. I think, certainly, over the course of time, certain buildings may have proved to out live their useful existence."