The Carlyle

The Carlyle, a new thirty-nine-story condo tower near the river in downtown, cuts an iconic swath on the Minneapolis skyline. With echoes of Cesar Pelli’s Wells Fargo Tower, the building could be mistaken for an office building. It’s the tallest residential structure built in downtown Minneapolis in years.

The wood-paneled lobby brings to mind a top-drawer hotel. Take a right, and you’ll find yourself in a warren of wine lockers, as well as a private dining room and boardroom for the use of residents. On the fifth floor resides the 6,000–square-foot spa/wellness center, complete with massage rooms. An outdoor patio on the same level features a swimming pool, a fire pit, and striking views of downtown. Association fees alone range from $300 to $800 a month.

But amid the changing market, there have been rumors and whispers of hordes of buyers canceling purchase agreements and walking away. Bob Lux, principal with St. Louis Park–based Apex Asset Management Corp., says cancellations have been nominal. “To date we’ve had less than ten [cancelled deals],” Lux says.

Some residents began moving into the 255-unit tower in December. In February, fifteen units remained available for sale. A grand opening is slated for this month.

After years in the apartment business, Lux has carved out a niche at the upper end of the local condo market. Apex partnered with commercial developer Opus Northwest on both The Carlyle and Grant Park, a twenty-seven-story project in Elliot Park in Minneapolis.

Grant Park was seen by many as an early, large-scale success story. It was also a haven for investors, meaning buyers with no plan to ever actually live in the unit. In that regard, Grant Park benefited from timing. Sales began in 2002, but closings didn’t start until 2003, meaning investors could capitalize on nearly two years of brisk appreciation in local housing prices and then flip the units.

Today, there’s no crest of appreciation to ride. Flippers are gone—which partly explains the diminished frenzy for condos. “The investor market is pretty much nonexistent,” says Lux.

In the absence of frothy demand from investors, Lux believes what remains are one-of-a-kind buildings that will continue to lure buyers. “We’re not trying to build somebody an expensive apartment. This is not your typical condo deal,” Lux says. “We’re not fighting demand as much as the perception of what the newspapers have been publishing over the last six months.”

In St. Paul, Alatus Partners, another Lux firm, teamed up with St. Paul–based Generation Developers on The Penfield, a proposed 313-unit, thirty-three-story tower. Lux is pleased with sales to date. “It’s the same kind of iconic design,” Lux says. “People are buying architecture, they’re not buying a glorified apartment. It’s kind of the next evolution of the buildings. It’s much more of an international design.”

Lux is optimistic about the fortunes of the local condo market, but in his business, he has to be. “The middle of ‘07 and into ‘08 is going to be really strong,” Lux says. “But some of the planned projects are not going to go forward. The risk is trying to generalize where there might be problems. We’re still seeing great strength in traffic and prospects coming in.”