In three years, the former Northstar Center in downtown Minneapolis was transformed from a vacant office space into 216 apartment units now called Groove Lofts at Northstar Center.
While developers and architects have typically seen conversions as a particular challenge, these kinds of developments have also become something considered necessary to reinvigorate struggling downtown cores in the post-pandemic era.
Changing use of buildings has always been “part of the equation” for urban developers, said Carole Mette, senior developer for Sherman Associates’ Northstar Center project. With the rise in hybrid and remote work since COVID, struggling office buildings have been at the center of this puzzle, she added.
Before conversion, the Northstar Center was largely vacant, Mette said. It also qualified for historic tax credits, had the right physical attributes for the renovation and was situated in a central downtown location. Mette said these factors meant it “checked all those boxes for a building to make for a good candidate.”
Groove Lofts is a “mixed-income” building. There are 44 units earmarked for tenants making under half of the median wage. It also isn’t the first phase of the overall Northstar Center redevelopment: Hotel Indigo and Star Bar & Bistro were completed in 2023.
Because the building was originally developed as office space, the units have unique floorplans with over 40 layouts. Groove Lofts also offers 10,000 square feet of amenities, including a media lounge, an arcade with karaoke and virtual reality rooms, a maker’s space, coworking lounge, a fitness center, and rooftop club room with a deck and storage space.
The $98 million project used about $35 million in federal, state and city subsidies.
Northstar Center was the birthplace of the Minneapolis skyway system. Through the skyways, residents of Groove Lofts are connected to Capella Tower, Rand Tower, Wells Fargo Center and Baker Center.
Sherman is also nearing completion of the office-to-residential conversion of Landmark Tower in St. Paul.
These types of conversions may not be a straightforward fix for a waning downtown tax base, but Mette said there are economic benefits many people don’t realize. For example, conversions require more labor than full reconstruction projects.
“They do help add to the tax base because, while a fully occupied high end office building will generate more real estate taxes than that same amount of square footage of an apartment building, the stressed vacant office building that has a very low assessed value isn’t doing that,” Mette said.
What makes a good conversion target?
Numerous factors go into whether or not an office is a good fit for residential conversion. Last year, architecture firm Gensler published a study that evaluated the potential conversions of 20 downtown St. Paul office spaces. This study was commissioned by the St. Paul Downtown Alliance, and Gensler has not conducted this same study for Minneapolis. However, Bill Baxley, a Gensler principal based in Minneapolis, said the main points in St. Paul apply to other cities.
“I think that Northstar conversion is going to be kind of a posterchild for what we need to do. It’s bold, it’s doing all the things we talk about — not just office-to-residential but also true mixed-use in our urban core,” Baxley said.
The study’s top two factors considered in conversion feasibility had to do with the total floor area of each story of a building — otherwise known as floorplates. Anyone talking about building conversion will likely bring up floorplates quite a lot.
“Buildings that have good bones, simple framework, reasonable distance from core to the exterior, are just miles ahead money-wise and fiscal-space wise to make those things work” Baxley said.
This makes sense. If a building’s floorplate is too large or oddly shaped, a large amount of interior square footage needs to be considered for reuse outside of a residential unit. People don’t want to live in an apartment with no windows.
That doesn’t mean an ill-fitting floorplate is necessarily a deal breaker, but it is a challenge, Baxley said.
“What do you do with those buildings with large floorplates? You kind of have to start cutting some holes in those floors, you’ve got to start introducing light in some other areas,” Baxley said. “Then you can see that building in a very different way, potentially, for residential — but you have to modify those plates.”
Interestingly, this makes older buildings often better suited for conversion because of how air conditioning technology evolved over the last century. Access to windows used to be a bigger priority when it came to heat mitigation in buildings. Air conditioning was sourced from outside air in through large buildings from the mid-1960s to the early 90s, which had a “massive, massive effect on design and architecture.”
With newer buildings like many in Minneapolis, Baxley said, “you sort of have to hack into them in a different way. They allow modification and additions and subtractions in a different way as well. We’re going to get radical with them in a different way than St. Paul.”
And not all buildings should be converted, he added. It is often easier to build a new development rather than converting an existing building.
“These things don’t pencil themselves out as good development deals yet unless they get some serious incentives from the city or elsewhere… We need to test some things out quickly or we’re going to be in a much worse situation.”
Winter Keefer
Winter Keefer is MinnPost’s Metro reporter. Follow her on Twitter or email her at wkeefer@minnpost.com.
