The investors who paid $253 million on Thursday to buy IDS Center in downtown Minneapolis plan to invest between $5 million and $10 million in the first year to upgrade the property.
The ownership group, which includes Beacon Investment Properties of Hallandale Beach, Fla., and two Israeli investment funds, plans to add a fitness center and conference space, probably in the lower-level space that’s vacant near Globe College, Terry Kennon, managing director of asset management for Beacon, told me on Friday.
Beacon also is studying retail upgrades in the Crystal Court area (where there are several restaurants) that would give it an updated look. The white light bulbs that define the edge of the skyway level could get replaced with some kind of electronic signage, Kennon said. Its also possible some of the space leased to banks could eventually get turned over to retailers that could attract more evening and week-end visitors.
The 1.4-million-square feet of office space in IDS Center is about 93 percent leased, which is one of the things that attracted Beacon and its Israel-based partners, Harel Insurance Investments & Financial Services and Menora Mivtahim Insurance Ltd.
The current management team at IDS is expected to stay, including General Manager Jim Durda.
Beacon plans to outsource the office and retail leasing to different firms, although Kennon wouldn’t comment on any specific vendors because he said no contracts had been finalized.
Cassidy Turley, which has its Minneapolis office in IDS Center, is a front runner for the retail leasing assignment, while Jones Lang LaSalle is the lead candidate to get the office assignment, according to sources who declined to be named to protect client relationships.
Beacon and its partners bought the building from Inland American Real Estate of Oak Brook, Ill. Inland had purchased it in 2006 for $277 million.
Beacon found the building late last year through Jamie Fink, a broker at HFF in Chicago, who was marketing the building for sale along with Jeff Bramson and Mark Katz of HFF.
“We were sourcing deals,” having someone in our office calling major cities and contracting brokers trying to find buildings, Kennon said. The building had justfallen out of contract with a previous buyer, Artis REIT of Winnipeg, so it was available and the sellers had a pretty good idea of the value, he said.
“We looked at the numbers and made an offer,” he said.