An entity related to The Excelsior Group has paid nearly $21.4 million for retail and office space and 91 apartments in the Blair Arcade complex along Selby Avenue in St. Paul’s Cathedral Hill neighborhood.
The seller is Roseville-based Ted Glasrud Associates Inc., which bought the properties from the St. Paul Port Authority in 1992, said Paul Buchmayer, vice president of commercial real estate for Ted Glasrud Associates.
“This (was) one of my favorite properties in our portfolio,” Buchmayer said Tuesday in an interview. “There’s a very strong market for retail and office there because of its close proximity to downtown.”
Another draw is that tenants have access to the adjacent 175-space parking lot, which was included in the sale, he said.
The sale was completed in two transactions, both of which closed Oct. 5, according to certificates of real estate value made public on Monday.
There is a family connection between the companies involved in the transaction. Ted Glasrud Jr., an executive vice president and partner with The Excelsior Group, is the son of Ted Glasrud, the president and chief operating officer of Ted Glasrud Associates.
The St. Louis Park-based Excelsior Group plans to “invest significant capital in both the multifamily and commercial areas of the buildings to bring new life to the property,” Brenda Studt, a spokeswoman for the company, said in an email Tuesday.
“We believe that with our planned improvements to the buildings, Blair Arcade and Hill Plaza will be a very attractive place to shop, dine, office, and live,” Studt wrote.
In the larger of the two Blair Arcade transactions, an Excelsior entity called Selby Avenue Realty LLC paid $18.96 million for the 150,434-square-foot Blair Arcade West complex. That four-story mixed-use building – constructed in 1982 – includes the 91-unit Hill Plaza Apartments over office space and first-floor retail anchored by the Fabulous Fern’s Bar & Grill.
The purchase price works out to an average of $208,360 per apartment, or $126 per square foot for the entire structure. The deal covers nearly 39,000 square feet of office and retail space, and the adjacent 175-stall surface parking lot. Ramsey County values the complex at $15.06 million.
The complex’s well-located apartments near downtown St. Paul likely drove the purchase price for the complex, said Mox Gunderson, a multifamily specialist for the Minneapolis office of Marcus & Millichap.
“This whole area along this stretch of (Cathedral Hill) is commanding big rents,” Gunderson said. “There’s been a lot of rental growth in the area over the last five, six years and that has a lot to do with a neighborhood that now has a lot of great retail and restaurants.”
Those include mainstays such as the W.A. Frost and Company just next door and more recent additions like Red Cow and Fitzgerald’s (both across the street), he added.
The Hill Plaza Apartments offer a mix of one- and two-bedroom units. Average sizes are 737 square feet for the one-bedroom apartments with an asking rent of $976, according to CoStar. The two-bedroom units offer an average of 1,080 square feet with an asking rent of $1,098.
St. Paul had a 2.3 percent apartment vacancy rate during the third quarter of 2016, according to the Apartment Trends report by Marquette Advisors.
In the second transaction, The Excelsior Group entity paid $2.41 million for 25,000 square feet of garden-level and street-front retail and office space inside the five-story Blair Arcade East building at 165 Western Ave. That deal, which works out to nearly $97 per square foot, does not include the 42 condominiums in the upper levels of the building. Ramsey County values the commercial space inside the building at nearly $900,000.
The Blair Arcade East building was constructed in 1887 and is on the National Register of Historic Places. It’s also considered a contributing property to St. Paul’s Historic Hill Heritage Preservation District. Many years before it was converted to condos and retail space, the building was called The Angus, a residential hotel, according to a 2011 Finance & Commerce “Building Blocks” feature.
Ted Glasrud Associates bought both properties in 1992 from the St. Paul Port Authority, about 10 years after the Blair Arcade West complex was constructed.
The retail and office space in both buildings are 100 percent occupied, according to CoStar.
January 24, 2017 | By Finance & Commerce: Hank Long | Original Article