Franklin Street Properties Corp. 2014 Annual Report
Development of Assets
Atlanta | Dallas | Denver | Houston | Minneapolis
Approximately 70% (in square feet) of FSP’s owned portfolio is within our top five core markets.
FSP owns and/or manages approximately 12.9 million square feet of office space located in 15 different states (as of December 31, 2014).
FSP has engaged in two successful ground-up developments over the past ten years, and anticipates that select development will continue as a featured component of our real estate investment activities. Of chief importance to FSP in any potential future development will be a long-standing familiarity/expertise in the particular location being considered. Therefore, potential development would most likely occur in one of our five core markets and within locations in those markets that we have owned and observed the dynamics for future growth first-hand.
For example, in 2014 FSP announced its intention to develop the location of its four-story building located at 801 Marquette Avenue South in the CBD of Minneapolis. The approximately 170,000 square foot brick building, originally constructed in 1923 and currently 100% leased to TCF Bank through December 31, 2015, is located on the corner of Marquette Avenue and 8th Street. FSP has owned this property and the adjoining 17-story 305,000 square foot tower located at 121 South 8th Street since July of 2010. FSP believes that the 801 Marquette Avenue South location is one of downtown Minneapolis’ best remaining development sites. Both properties were originally purchased by FSP with the specific intention:
- To improve, update and continue to operate the approximately 305,000 square foot existing 17-story multi-tenant office tower for a long-term hold.
Actions Taken: FSP’s updates to this property have been substantially completed and have included a complete elevator modernization, a brand new skyway level lobby and elevator lobby, a brand new conference center, parking ramp updates, and an ongoing restroom upgrade program. The results have been well received by our tenants and the marketplace.
- To rebuild and/or completely redevelop the low-rise building upon the end of the TCF Bank lease into a more efficient office property that could command higher rents per square foot than the existing four-story structure.
Actions Taken: FSP has assembled a seasoned development team that includes Perkins & Will as architects, CB Richard Ellis as leasing agents, and Ryan Properties as builders. Currently, FSP is very active in development planning and feasibility work. Construction of a new Minneapolis CBD project could not begin until early 2016 and only then if market conditions are favorable and substantial pre-leasing of the project has been completed. Importantly, FSP is already working on space planning with potential office tenants, hotel users and residential firms, analyzing prospective designs that range from a new approximately 170,000 square foot office building up to an approximately 600,000 square foot mixed-use tower that would include office, hotel and/or residential. We believe that a final plan will be publicly announced during the course of 2015.
MINNEAPOLISMinneapolis possesses a broadly diversified economy and benefits greatly from its strategic central Midwest position within the ever-growing global demand chain of food production, processing and transportation. Minneapolis is also strong in retail, industrial and medical and financial services.