North Loop’s T3 Office Project Sold to Investment Group
When Houston-based Hines started work on its T3 office building in the North Loop area, the developer was rolling the dice. Hines built the project on “spec” – commercial real estate shorthand for “speculation” – with no signed leases in hand.
But Hines was banking that it could draw tenants to North Loop, an increasingly popular destination for startups, tech companies and creative firms. The gamble paid off. Today more than 180,000 square feet in the 222,000-square-foot property has been leased.
On Tuesday, Chicago-based LaSalle Investment Management announced that it acquired the property for its core open-end real estate fund, LaSalle Property Fund. The sale closed on May 31; the company did not disclose the purchase price.
Seattle-based e-commerce giant Amazon.com Inc. is the building’s anchor tenant, with a long-term lease for about 50 percent of the building’s space. T3 has a current occupancy rate of 82 percent. Amazon has an option to expand on the fourth floor. If Amazon exercises that option, the building will be nearly full.
Amazon operates a technology development office in the building. The company currently employs more than 150 people and recently announced plans to add another 200 jobs there.
Other T3 tenants include Industrious, a New York-based provider of co-working space.
Hines completed construction of the project in late 2016. T3 stands for “timber, transit and technology.” Hines billed the project as the first “mass timber” building in the U.S. using layered timber which is stronger than standard timber. The T3 building in North Loop is seven stories, which would normally be built with concrete or steel.
The Minneapolis project was the first T3 building for Hines, which is now developing T3 office projects in Atlanta and Chicago.
Investment demand remains strong for commercial real estate assets in the Twin Cities. The 50 South Sixth office tower in downtown Minneapolis sold for $258.5 million in December 2017 – an eye-popping price of $370 per square foot.
In another deal, Capella Tower in downtown Minneapolis sold for $255 million in February. The price worked out to about $183 per square foot for the property, which totals nearly 1.4 million square feet of space. Marquette Plaza in downtown Minneapolis recently sold for $88.4 million – about $169 per square foot.
The T3 property has a current assessed value of $50.15 million according to Hennepin County property tax records. Commercial real estate properties generally sell at prices higher than the building’s assessed value for property taxes.
LaSalle Investment Management is an independent subsidiary of Chicago-based Jones Lang LaSalle Inc. (JLL), one of the world’s largest commercial real estate services companies.
A common area within the T3 building. (Photo by LaSalle Investment Management)
Additional common spaces within the T3 building. (Photo by LaSalle Investment Management)
Office space within the T3 building. (Photo by Steve Bergerson)