Minneapolis hotel sells for a third of its 2018 price

Why that matters for the city's taxpayers

We at Center of the American Experiment have long warned of looming budget squeezes in Minneapolis and St. Paul as a result of collapsing commercial property values. Simply put, declining values mean declining property tax valuations which mean declining commercial property tax payments which mean increasing residential property tax burdens. Both cities are seeing this play out now.

Commercial property values are tanking because office residency rates are down: People are not returning to work downtown in sufficient numbers. This problem seems to be affecting other commercial properties down town also.

Bring Me the News reports:

A hotel that has occupied a spot in downtown Minneapolis for more than 100 years has been sold.

Real estate filings reported by the Department of Revenue shows that the 4-star Hyatt Centric Downtown Minneapolis and a neighboring property was sold for $11.6 million in a deal that closed on Dec. 30.

…

The $11.6 million sale price marks a significant discount on the $30 million it sold for in 2018. The latest deal also includes the five-story building at 216 Seventh St. S., which is connected to the hotel.

Filings also state that $3.08 million in personal property – such as furniture and equipment – is included in the deal.

In other words, the price of that hotel slumped by 61% in just six years.

This is another reflection of how the decline in economic activity in downtown Minneapolis is eroding the tax base there. It also shows that the much discussed crisis in office values is only on aspect of a broader phenomenon.