$2.5 million renovation on tap for downtown's Plaza VII

By Sam Black, Staff Writer, Minneapolis / St. Paul Business Journal

August 20, 2010 - Carlson Real Estate Cos. plans to start work this fall on a $2.5 million facelift at Plaza VII, a 36-story downtown Minneapolis office building the firm says is too often overlooked.

The office tower, located at 45 S. Seventh St., is on the top tier of a mixed-use complex that includes a 315-stall parking ramp and the full-service Radisson Plaza Hotel Minneapolis, which is owned and managed by another division of Minnetonka-based Carlson Companies Inc.

“The major push is to give the office tower more presence,” said Matt Van Slooten, president of Carlson Real Estate. “It’s really always been secondary to the hotel.”

An overhaul of the hotel may be next, but a Carlson Hotels & Resorts spokeswoman said plans are not finalized yet.

The complex was built in 1986. The hotel operates on floors three through 16, and the office component is on floors 18 and higher.

The office tower became even less visible a few years ago when the hotel expanded its restaurant, FireLake, onto the sidewalk with a seating area and new canopy.

People on their way to a Minnesota Twins game might not even notice the office building when they walk by on the street level, Van Slooten said. It’s also a challenge for people unfamiliar with the building to access the office component from the parking garage and skyway levels.

To address those problems, Carlson plans to create a new street-level entrance and awning for the office building. It also will enhance signs and access to the office-building lobby on the skyway and parking entrances.

Carlson plans to renovate the lobby so it has a more warm, up-to-date feel, brighter lighting and a sitting area with wi-fi access. On the skyway level, Carlson plans to build a new leasing office and a conference room available for tenants. And it will update the fitness center on the 17th floor to be more conducive for office tenants to use.

Carlson also is updating the office building’s name, switching to a spelled-out version of the word seven and dropping the Roman numerals.

Van Slooten said the office tower needs to be freshened up, and it will go ahead with the changes apart from any hotel renovation.

Carlson has hired Nelson, a design firm in Minneapolis, to lead the architecture and design of the office space. The project should be sent out for bid to general contractors in the next couple of weeks. Carlson wants to get started on construction as soon as possible and have it wrapped up in early 2011.

The building has about 80,000 square feet of vacant space now, or about a 25 percent vacancy rate.

Carlson made its plans to renovate the building at the same time Plaza VII’s largest office tenant, Oppenheimer Wolff and Donnelly, is considering whether to stay there.

Oppenheimer, a law firm that leases about 100,000 square feet, or one-third of the building, has been looking for several months at various buildings where it may move its headquarters. It’s one of the biggest active real estate prospects in the downtown market today.

Oppenheimer leases space on floors 31 to 36 and parts of floors 29 and 30. It has narrowed its options to staying at Plaza VII or moving to the Campbell Mithun Tower in Minneapolis, according to market sources who declined to be named to protect client relationships. The law firm’s lease expires in late 2012.

Barbara Clark, Oppenheimer’s executive director, declined to comment.

Van Slooten said the renovation is going to happen with or without Oppenheimer.

“If Oppenheimer stays in the building, this is important for them. If they leave, it’s equally important for us marketing the space,” he said.

NorthMarq Real Estate Services brokers Jim Montez and Sonja Breyfogle represent Carlson in leasing the office space.

Corey Whitbeck, a broker and tenant representative at Minneapolis-based TaTonka Real Estate Advisors, said Carlson is wise to react to comments made by tenants and prospective tenants for years.

“There’s always been a lack of presence and a sense of arrival to the building,” he said.

In today’s market, rental rates are being pushed down and landlords are getting more aggressive with lease terms to keep and attract tenants.

“You need to have something that’s going to make the difference and tip the scale toward a particular building,” Whitbeck said.

Improving the access and visibility of the office space should help at Plaza VII, he said.

“They’ve got a good location, but in some ways, the office space is a little bit of an afterthought. Improvements in those areas would be great.”

Carlson Real Estate Company is an affiliate of Carlson, a global group of integrated companies providing hotel, marketing, restaurant and travel services directly to consumers, corporations and government entities. Carlson Real Estate Company is dedicated to developing long-term client relationships by operating with caring and integrity and providing innovative and accommodating solutions. Its portfolio of office and flex/industrial space concentrated in Minnesota, Arizona, and North Carolina exceeds 6 million combined square feet. For more information about Carlson Real Estate Company, visit www.carlsonrealestate.biz.