Newspaper article

The Inside Story of Wells Fargo's Downtown Minneapolis Deal

Newspaper article

The Inside Story of Wells Fargo's Downtown Minneapolis Deal

Article excerpt

The corner of Portland Avenue and Fourth Street in downtown Minneapolis feels like forsaken terrain: a no man's land close to the heart of the city. The neighborhood's defining feature is a sea of dismal surface parking lots that look like the shadowy "Backstreets" of a Bruce Springsteen song.

There are no tall buildings, skyways or food trucks in Downtown East (for this story's purposes the windswept extremity of downtown east of Third Avenue South). It's a solid 10-block hike from here to the IDS Center. Even the panhandlers don't seem to have much interest in the area: There's hardly anyone around to ask for spare change. A sign on one of the blocks touts a parking rate of a mere $3 per day.

It appears to be an unlikely intersection to anchor the largest redevelopment project that the city has seen in decades, an expansive $400 million plan by Minneapolis-based Ryan Cos. US Inc. But there's no area of downtown that needs the project more than Downtown East. The vision will unfold on five blocks of land totaling 12.5 acres that had been owned by the Star Tribune for what seemed like forever.

The deal to overhaul Downtown East wouldn't be happening if not for San Francisco-based financial giant Wells Fargo & Co., which is investing $300 million -- 75 percent of the total project cost -- and will own two office towers overlooking a new urban park, creating a corporate campus at the edge of downtown Minneapolis. The office towers will house 5,000 employees for Wells Fargo, which ranks as downtown's second-largest employer, behind Minneapolis- based Target Corp.

But what does Wells Fargo see in the lonely streets of Downtown East that no one else has seen for decades?

"It's going to be fun to be on the cutting edge of turning an area that hasn't been real vibrant into a much more vibrant area. We like the fact that there's development coming in," David Kvamme, CEO of Wells Fargo Minnesota, tells Twin Cities Business. "We think it's just going to be a really exciting place for our team members to call home."

Downtown East? Exciting?

Kvamme says that Wells Fargo sees big changes ahead for the neighborhood. The Ryan plan also calls for residential units and retail space, and Kvamme expects to see more of both drawn to the surrounding area. Kvamme says that the numerous transit options -- including nearby light rail -- tipped the scales in favor of the Downtown East site over suburban options. The story of how, and why, a bank holding company based elsewhere became the catalyst for the biggest redevelopment project in decades reveals no single leading champion or effort, but rather a rare, nearly perfect confluence of interests, abilities and timing.

The stars align

The complicated Downtown East project fell into place thanks to a timely confluence of circumstances: the development of the Minnesota Vikings' new football stadium, an old-school media company looking to divest itself of long-held land holdings, the quest by Wells Fargo to create a new campus, and a Minneapolis mayor near the end of his tenure looking to keep jobs in the city.

The deal was in the works for 16 months before Ryan closed on the site in February, according to Rick Collins, who has been piloting the project as vice president of development for Ryan Cos.

For Wells Fargo, the new urban park was a linchpin without which the project could not have fallen into place. "This site was not attractive enough for a corporate user to make a several-hundred- million-dollar investment," Collins says, "if surrounded only by surface parking lots."

Ryan is planning to break ground on its project in mid-May. It is set for completion in mid-2016.

But where, then, are Wells Fargo employees going to eat lunch in an area that currently looks like an asphalt desert? Jim Montez, a veteran downtown office broker with Bloomington-based Cushman & Wakefield/NorthMarq, says that the density of the planned redevelopment project will draw other retail to Downtown East. …

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