Photo: Karen Bleier/AFP via Getty Images
The owner of Twin Cities’ most expensive office tower is choosing to move out of the property instead of continuing to pay the loan.
what’s happening: The 30-story LaSalle Plaza in downtown Minneapolis auction The following week, the previous owner, the Illinois Teachers Retirement System, avoided foreclosure by transferring the building to its lender, Northwest Mutual.
The nearby Fifth Street Towers are also facing the same fate and could return to lenders later this month, according to Axios sources not authorized to discuss the matter.
- Real estate experts predict more distressed office properties will follow in Minneapolis, St. Paul and suburbs.
Important reasons: Commercial real estate accounts for nearly 30% of the property taxes Minneapolis collects. Auctions like LaSalle Plaza’s can devalue office towers and hurt the city’s tax base.
- Minneapolis Estimates and Taxation Commissioner Steve Brant told Axios:
What we see: Real estate analytics firm Trepp is monitoring IDS Center, the city’s most iconic office tower, due to a 77% occupancy rate and the loss of Nordstrom Rack from Crystal Court, said senior managing director Manus Clancy. said Mr.
Catch up soon: The pandemic and the rise of remote work have hit the Twin Cities office market hard, with vacancy rates rising to 25%, according to commercial real estate firm Cushman & Wakefield.the office tenant shedding space Because workers don’t come very often or not at all.
Line spacing: Minneapolis began lowering tax valuations for downtown office towers in 2020. As a result, the tax burden has begun to shift slightly to homeowners.
What they say: Minneapolis Downtown Council CEO Steve Kramer warns city councilors that if they don’t pay attention to the health of the downtown office market, things will get worse for homeowners.
- Homeowners haven’t seen a big tax hike yet, thanks in part to the American Relief Act, but Cramer warns they’ll be out of money by the end of 2024.