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Looking for a Victory? The Vikings May Want to Try Left Field…

Yes. Although we are academics and we spent more time reading through investment prospectuses and development plans than watching Sports Center, we are well aware there is no left field in football. However, after the lackluster performance of the Purple and Gold last year, Mr. Wilf and Co. may want to look to their peers on the other side of downtown (the ones who do have a left field). Despite the sluggish start for the Twins (there is still time!), one thing is certainly not subpar about Minnesota sports currently, and that is Target Field. By any standards, the eight acres that only five years ago was a parking lot, is now one of those landmark buildings that represents the identity of the entire state.  All good buildings, businesses, ideas, etc. start somewhere, with someone, and even though everyone probably has had thousands of big ideas, few people get to see them realized. That is the hard part about great ideas, plainly put, it’s really hard to turn them into anything. The men who came up with the idea for Target Field, Bruce Lambrecht & Dave Albersman spent years working on moving the Twins to, what is now Target Field. (for that story click here). lucky enough for the Vikings, the same two men are fired up and at it again. Lets just hope the Vikings, and the politicians who are responsible for this decision, decide to pay attention.

Proposed Stadium at the Farmers Market Site, courtesy of Bruce Lambrecht

Proposed Stadium at the Farmers Market Site, courtesy of Bruce Lambrecht

The similarities between the Viking’s current situation and the Twin’s search for a new home are eerily similar. The Vikings have, for several years, voiced concerns about playing in the Metrodome, and were fairly clear that they were not interested in renewing their lease at the Metrodome. The “fairly” was clearly removed on December 12th, of last year when this happened… During the offseason several plans have emerged, and sites proposed for development of a new stadium. Recently, the talk has been narrowed down to three sites, (1) Rebuilding on the current Metrodome property, (2) A stadium in Arden Hills, a suburb 10 miles north of St. Paul, and (3) Developing a site near Target Field, on what is now a series of small buildings, storage facilities, and the Minneapolis farmers market. Mr. Lambrecht and Mr. Albersman are the driving force behind the third option, and have begun the same arduous process that the probably swore they would never start again. Each of the three site has positives and challenges, and will undoubtably require a great deal of planning and foresight if anyone is going to become nearly as successful as Target Field.

The first major battle, and the one that causes the strongest emotions is who, how, and what will pay for this project. Two recent studies looked at the total cost of developing, building, and creating the infrastructure necessary for the project, Finance & Commerce reports,

An analysis from the Metropolitan Sports Facilities Commission says the “hard and soft” construction costs for the Metrodome and Arden Hills sites are about the same – $825 million for the dome site, $859 million for Arden Hills. However, the Arden Hills location would require up to $339.5 million in highway, parking, pedestrian access and utility improvements, which brings the total price tag to $1.2 billion, the analysis said. By contrast, the Metrodome location needs a far more modest $29.9 million in such improvements, for a total cost of $895 million. Also on Tuesday, Gov. Mark Dayton released the findings of a separate analysis that says it would cost up to $240 million for the transportation improvements needed to accommodate the Arden Hills location. Dayton said any state contribution to the project would be capped at $300 million – including the cost of road improvements.

“I support the project in either location up to that amount,” Dayton said. “If one project is more expensive than the other, the Vikings are going to have to make up that difference unless the local partner does.” To read the entire story click here

Although the Farmers Market site was not included in this study, Mr. Lambrecht has provided estimates that would place the total cost of the site in the same range as the Metrodome. It is also important to note that at this point in the search for a new Twins Ballpark, Mr. Lambrecht’s parking lot was barely even in consideration. The key behind Mr. Lambrecht’s plan is the same as it was for Target Field, in that an accessible urban sports venue is valuable to everyone in the state, even those who could care less about football. Mr. Lambrecht was right the first time, and has since quieted almost everyone of the many critics, who thought a new Twins stadium was too expensive, the site was too small, and any other reason imaginable. For everyone’s sake, let’s hope he is able to repeat history, and make lightning strike twice in the heart of downtown Minneapolis.

This is the first in a series of stories about this topic, which is sure to dominate headlines in the sports, real estate, local/metro, and front page of the states newspapers (if anyone still reads them…) Check back for more.


Commercial Real Estate, Development, Executive Insight Series, Industry News, Real Estate Trends, Residential Real Estate, Retail Real Estate, Uncategorized

Executive Insight Series: Bob Lux and the 14 Million Dollar Question About Block E

Bob Lux- Principal at Alatus Development

Bob Lux- Principal at Alatus Development

“So, what is the plan for Block E?”

A simple question that was definitely on every attendee’s mind at the most recent Real Estate Executive Insight Series. However, the answer isn’t so simple, and if it were not for Bob Lux’s (principal at Alatus LLC) charisma, intelligence, and experience in leading major, press-worthy development projects the answer might not have been as well received. As any gifted public figure would, Mr. Lux skirted the question, but in his sidestep, alluded to several important things concerning the future of Block E, as well as the kind of person Mr. Lux is. Before his answer can be assessed properly, it is important to understand Mr. Lux’s history, professional accomplishments, and his philosophy on development (and life).

Mr. Lux grew up in a Long Prairie, a small community in central Minnesota, a town that most likely does not have a building higher than the many crop silos that dot the agrarian landscape. Like many young men from small towns, Mr. Lux left home in search of success and the experience that can only be found in the “big city”. After earning his degree in Business Administration from the University of Minnesota, Mr. Lux returned to Long Prairie with the intention of starting a home building business in the area. He purchased a lumber yard with his father and began building farmers homesteads in the immediate area. Although this was quite different than the projects he would eventually oversee, Mr. Lux quickly learned the importance of adding value to differentiate his product, otherwise it would simply be a commodity.

After a short time at home the urge to return to city life became to great to resist, and once again, Mr. Lux left Long Prairie for the Twin Cities. His first employer, The Dominium Group, was developing high-density suburban real estate, which faced major issues surrounding obtaining approval from the community and local government for the rezoning of  land for this use. Suburban homeowners are very protective of their communities, and the amount of space that each homesite has was a reflection of the owners desire for privacy and quiet living. Mr. Lux’s first assignment was in Eagan, MN, where he faced opposition form the mayor as well as landowners surrounding the proposed site. To change the attitudes of the landowners surrounding the site, who were a critical stakeholder in the success of the project, Mr. Lux used a mixture of logic, emotional appeal, and financial acumen to reach out to each of the parties and work with them to develop a compromised plan that met the needs of everyone. In the end this project was approved, and through it, Mr. Lux learned one of the key lessons that has helped him throughout his career. During the lecture, he repeatedly cited the ability to listen to, and connect with people as the most important skill he has, and the main reason why projects fail or succeed.

Continue Reading

Commercial Real Estate, Development, Executive Insight Series, Industry News, Minnesota Real Estate Journal, Real Estate Trends, Retail Real Estate, Uncategorized, Upcoming Industry Events, Upcoming UST Events

Block E: A Deal Alatus Could Not Refuse

blocke7The short history of the building currently occupying the 600 block of Hennepin, know commonly as Block E,  in downtown Minneapolis is a staggeringly accurate metaphor paralleling the last decade of the greater real estate market. According to Minneapolis St. Paul Business Journal, the original cost of developing the site in 2001 (less the $36.25 million spent on the Graves Hotel which did not change ownership) was $105.75 million. When Alatus Development purchased the development in July, 2010 they paid a paltry $14 million, or roughly 13.23% of the original price. At the risk free rate of return (based on the 10 year T-bill which average 4.42% over the period) the investment in Block E would be worth $162.973 million, resulting in a savings of $148.973 million for Alatus in todays value. This investment appears to be a no brainer, but it is not without risk. Since opening, Block E has lost most of the anchor businesses that originally signed leases in the space including: Borders Books, Game Works, The Hard Rock Cafe, Applebees, and Hooters. The space which Game Works and Borders occupied is still vacant, presenting Alatus and Bob Lux, the lead developer on the project, with significant challenges in their attempt to turn the site into a successful retail operation. That said, the final price tag for the site was too attractive to pass on.

One significant factor that helped persuade Mr. Lux to move forward with the deal is the 550 heated underground parking spaces beneath Block E, at $25,455 per spot is inline with other parking structures around the city. Looking at the deal from this perspective, Alatus paid market rate for the parking, and got a deal sweetener that is quite impressive, approximately 213,000 sq/ft of retail space. Pricing it the other way, at $66 sq/ft, the retail space was purchased at a price that is almost inconceivable given Block E’s location at the heart of the downtown district and within walking distance of Target Field, The Target Center, and many of Minneapolis’s theaters and restaurants. Despite the obvious advantages in location, the previous owners at Block E have had serious difficulty maintaining profitable levels of business. Trying to figure out what to do with this space will certainly keep Mr. Lux up at night, until a solution that provides long term tenants can be derived. Continue Reading

Executive Insight Series, Property Management, Retail Real Estate, Upcoming Industry Events, Upcoming UST Events, UST Program News

Is a casino in the future of Block “E”? Hear about future plans from owner Bob Lux at the Real Estate Executive Insight Series – April 5

Bob Lux, Alatus LLC

Bob Lux, Alatus LLC

Real Estate Executive Insight Series:

Real Estate Acquisitions, The Story of Block “E”

The Real Estate Executive Insights Series is presented by the Opus College of Business MSRE program. This series invites speakers from the real estate industry to provide valuable information and discussion about hot topics and current trends. This is a free program and is open to the public.

With the addition of Target Field and continued popularity of the theater district and downtown restaurants, Block E sits in the middle of a vibrant Minneapolis neighborhood.  This gives Alatus LLC a great opportunity as the new owner of the Block E entertainment complex.  Bob Lux of Alatus LLC will talk about plans for the new acquisition and their other downtown real estate. 

Date: April 5
Time: 5:45 – 7 p.m.
Minneapolis Campus, University of St. Thomas
Cost: Free

Learn more and RSVP Today »