After months of negotiations and uncertainty for the tallest and most valuable office building in downtown Minneapolis, the owner of the IDS Center has negotiated a three-year extension of its loan on the 52-story tower.
“This extension enables us to continue doing what we’ve done successfully for many years: adeptly managing the iconic property while executing a highly successful leasing program,” said Deb Kolar, general manager of the tower, in a statement.
The agreement gives the owner of the tower, Florida-based Accesso, more time to line up permanent financing several months after missing a balloon payment on the $151.7 million loan. The due date had come in the midst of unprecedented challenges for office owners, including record vacancy rates, declining values and a dire shortage of lenders willing to refinance loans.
The tower, one of the most recognizable on the city skyline, has 1.4 million square feet and has long been considered a premier address off Nicollet Mall and South Eighth Street. Since the beginning of the pandemic, the tower has lost several key office and retail tenants, including Nordstrom Rack and most recently, Hubert White, a high-end men’s store that was a key retail anchor at the base of the tower for years..
Since then, the tower has scored several leasing wins. Last month, Accesso said it had completed 16 lease transactions for more than 121,000 square feet.
“We are excited to come to terms on a loan extension for the IDS Center as challenges surrounding the availability of capital persist, reflecting our success at the property despite a difficult macroeconomic environment,” Kolar said in the statement.
The property value was $256 million at the start of the loan, but earlier this year, the value lowered to $180 million.
Accesso said Iron Hound Management Company, a New York-based firm that helps real estate owners renegotiate debt, assisted in the extension negotiations.
Trepp, a commercial real estate data and analytics company, reported earlier this year about a quarter of the office space in the building was vacant.
Throughout the the Central Business District in downtown Minneapolis, the average vacancy rate in was 20.3%, according to a third-quarter report from Colliers. That was on par with previous quarters but was the highest vacancy rate for any submarket in the metro and only slightly higher than the I-494 corridor submarket.
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