Hotels The Latest Craze In Minneapolis Building Boom
Never mind apartments: the hotel building boom in downtown Minneapolis is in full swing.
On Monday, the Minneapolis City Planning Commission will consider proposed plans by Willmar-based TPI Hospitality for a 135-room Holiday Inn Express at 317 Second Avenue South in downtown Minneapolis.
A TPI affiliate acquired the property, which has been known as the William E. McGee Building, for $4.2 million in March, according to Hennepin County property tax records. TPI will convert the vacant office property into a hotel.
“We think it’s a great site. It’s skyway connected in the heart of the financial district downtown. It seems like a logical, no-brainer location,” Tom Torgerson, CEO of TPI Hospitality, told Twin Cities Business. Torgerson notes that the site is close to the light rail transit line and the new stadium for the Minnesota Vikings, which is under construction.
Torgerson says that the Holiday Inn Express is slated to open in June 2016.
The downtown Minneapolis hotel pipeline includes several projects:
- The new 211-room Hampton Inn & Suites near Target Center and First Avenue just opened in April.
- In November, Golden Valley-based Mortenson announced plans to develop a 9-story, 244-room hotel at 401 Hennepin Avenue. The $48 million project, set for completion in 2016, will be the first AC Hotel by Marriott in Minnesota.
- According to a city staff report in May, Minneapolis-based Ryan Companies is proposing a 164-room Radisson Red Hotel as part of the second phase of its Downtown East project, also near the new stadium.
- New Orleans-based HRI Properties recently acquired the vintage Plymouth Building in downtown Minneapolis with plans to convert the property into a hotel.
- The city of Minneapolis recently received three competing hotel plans for a vacant, city-owned property at 800 Washington Avenue South.
Counting the new Hampton Inn & Suites project, the Meet Minneapolis Convention & Visitors Association currently tallies 27 downtown Minneapolis hotels with 7,112 rooms.
While Torgerson is confident in his Holiday Inn Express site, he adds that he thinks that the market is headed for saturation as developers chase new hotel projects.
“I think it will get way overbuilt quickly,” says Torgerson. “That’s just the cycle. That’s the way it works.”
But hotel broker and industry analyst Ted Leines of Eden Prairie-based Leines Hotel Advisors Inc. says that he’s hearing good reports about both occupancy and room rates in downtown Minneapolis hotels. He thinks that the new hotels will fill key niches in the downtown hotel market.
“Those flags going in, they’re strong brands. I think they’re going to do very well,” Leines said.
Leines adds that the area around the Downtown East development and the new Vikings stadium are helping to create new demand on that side of downtown Minneapolis.
“That’s completely changing everything on the Downtown East side,” says Leines. “That is really going to drive a whole new market that wasn’t there before.”