1 May 2024
Madison Equities, believed to be the largest property owner in downtown St. Paul, has put its entire downtown portfolio up for sale, as well as the Handsome Hog restaurant on Selby Avenue.
Spanning 1.6 million square feet, the 10 properties include six of the oldest and most prominent commercial buildings in the capital city, including the iconic First National Bank Building, the Alliance Center and the U.S. Bank Center, as well as two downtown parking ramps.
“That is the sum total of their whole portfolio of downtown office buildings,” said Steve Lysen, a broker with CBRE, which is soliciting all-cash offers for the properties without a formal asking price but “well below replacement cost,” according to marketing materials.
“The preference is to sell it to one buyer,” Lysen said. “That may or may not be possible. We may have to look at breaking it up. We just started the process, so we’ll see. If we had a full offer that worked for us, that would be the preference.”
Crockarell left large property holdings
Madison Equities had been led for decades by Jim Crockarell, a sometimes cantankerous real estate developer whose love of old downtown St. Paul buildings was often overshadowed by his clashes with City Hall, labor interests, lenders and even tenants. Crockarell died in January at the age of 79, leaving his wife, Rosemary Kortgard, in charge of a large swathe of the capital city’s office market, including commercial properties around Mears Park in Lowertown.
Kortgard has shown no interest in running the real estate holdings herself.
“She just wants to be on her way,” said Lysen, who said the hope is that a single buyer comes forward with an interest in filling the properties as best as they can despite a slump in the downtown office market.
“Part of the preference for selling it to one buyer would be to have a cohesive plan,” he said. “There’s a hotel that is approved and ready to be built in the Park Square Court building. Our hope is that people do things that add value. If we sell it to individual users, they might lease it up to 25% and it just sort of stagnates. That’s not good for the city. That’s not good for anybody.”
The properties
The properties include: the First National Bank Building on Minnesota Street, the Alliance Center on Fifth Street, 375 Jackson Square, U.S. Bank Center on Fifth Street, the Empire Building/Endicott Arcade on Robert Street, the Park Square Court building on Sibley Street, the Stadium Ramp on Sixth Street, the Capital City Ramp on Fourth Street, the building occupied by the Handsome Hog restaurant at 173 N. Western Ave. and the adjoining surface parking lot at 401 Selby Ave.
Occupancies range from nothing at all in the Park Square Court and Empire buildings to 57% at U.S. Bank Center, which is losing nine floors of tenancy when U.S. Bank’s office lease expires in October.
The Alliance Center and First National Bank buildings are 44% occupied, according to CBRE’s 49-page offering memorandum.
“Buyers have the ability to add value and improve financial returns by increasing occupancy through leasing and repositioning the properties through redevelopment,” reads the marketing materials. “The portfolio offers unprecedented scale. The owner is and subsequent buyer will be the largest land owner in Downtown St. Paul.”
The portfolio is being offered without a formal asking price, according to the marketing materials, and “although a call for offers and bid due date may be set at a later date, ownership reserves the right to respond to offers as they are received. Buyers are encouraged to make offers on an all cash basis on the entire portfolio, sub-portfolios or individual properties.”
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