A judge’s recent ruling approving the potential foreclosure of the Dayton’s Project sets up a thorny question: What’s going to happen to one of the biggest — and emptiest — buildings in downtown Minneapolis?
Why it matters: If some creative developer can’t figure it out, there’s a risk that one of the city’s largest properties, in the heart of Nicollet Mall, could remain hollow and fall into neglect.
Catch up quick: New York developer 601W’s $350 million redevelopment of the former Dayton’s department store turned out to be a flop after a buzzy 2017 kickoff that included plans for an Andrew Zimmern-curated food hall.
- The 1.2 million-square-foot property struggled to land tenants right away, even before the pandemic. It once reached 28% occupancy but it’s losing its biggest tenant, the accounting firm EY, and the food hall has been scuttled.
- 601W owes lender Fortress Investment Group $220 million in unpaid principal, interest and fees, while the building’s city-assessed value is around $27 million.
An attorney for Fortress laid out the issue during a January court hearing.
- “If they foreclose on this, they’re going to get the privilege of owning an empty building that is going to require significant operating costs.”
Possibilities for the building
Fortress declined to comment on its plans for the property, so it’s not clear how much appetite it has for keeping the building versus selling it…