In May, I wrote about Madison Equities putting ten of its commercial properties in downtown St. Paul up for sale, including the First National Bank building, the Park Square Court building, the Empire Building, the Alliance Center, and two parking ramps. Together, this totals more than 1.6 million square feet in commercial space.
At the time, the Pioneer Press reported that:
…occupancy rates in those commercial buildings average 50% or less and dropping. In some cases, estimated market values calculated by the Ramsey County assessor’s office list building values at or even below where they were a decade ago, when the office market was still re-emerging from the Great Recession.
This was likely to make them a tough sell. How tough is shown by the bankruptcy of the Park Square Court Building following a lawsuit alleging that the building’s owner failed to repay a $2 million loan.
The vacant building is, apparently, an unappealing prospect for investors. The Star Tribune reports that:
The notice said broker CBRE has been marketing the property, which is listed without a price, for six months to no avail.
“There’s just no viable offers coming forward,” said John Lamey III, [listed representative for debtor Park Square Court Building LLC, Rosemary] Kortgard’s bankruptcy attorney.
With no takers, the building is likely to be sold for a fire sale price which will impact both its value and the resulting property tax liabilities. Minneapolis is currently facing the same problem. The collapse of commercial real estate in these downtowns looks like causing budget problems pretty soon.