A Tale of Four Towers: From historic foreclosures to $1 sales, the Minneapolis skyline is facing a Dickensian reality that threatens the city’s fiscal heart.
Downtown areas around the country are facing significant headwinds these days, a condition particularly prevalent in the Twin Cities. But of the many challenges they encounter, one of the most towering is the plight of high-rise commercial buildings in the center of Minneapolis. The dilemma has been magnified recently by developments affecting four iconic structures.
Despite their historical and fiscal differences, this quartet is encountering common structural problems that warrant review by those concerned about the vitality of the downtown core and its impact on the broader metropolitan area.
Foshay Foreclosure
The one of the four troubled towers facing the most imminent crisis is the iconic Foshay Tower. This edifice, located between 8th and 9th Streets on Marquette Avenue, defined the Minneapolis skyline for more than four decades. Built on the eve of the Great Depression in 1929, the 32-story structure was modeled after the Washington Monument. With its Art Deco interior, it was the tallest building west of the Mississippi—indeed, west of Chicago—until its 447-foot height (604 feet including the antenna) was surpassed by the IDS Center in 1972.
Its storied history earned it a place on the National Register of Historic Places in 1978. The tale began with utilities magnate Wilbur Foshay, who hosted a spectacular opening ceremony in the summer of 1929. The event featured celebrities, political luminaries, and a performance by the celebrated bandleader John Philip Sousa, who serenaded 25,000 guests with his “Foshay Tower—Washington Memorial” march.
Within six weeks of that opening, the building was in receivership. Foshay himself was later convicted and imprisoned for mail fraud. The building survived, but it fell on hard times over the decades. By 2015, new ownership spent nearly $90 million to convert it into the W Hotel, removing commercial tenants and adding the Prohibition Bar on the 27th floor.
In a “Yogi Berra-like” case of déjà vu, the Foshay is back in financial hot water. It now faces foreclosure on a $51 million mortgage. The owners have fallen into arrears with a claimed $43 million owing for principal, interest, and legal fees. The legal proceedings are currently unfolding in the Hennepin County Courthouse, just three blocks from the famed tower.
Lumber Languishes
More than four decades before Foshay’s fiscal folly, the signature building in downtown Minneapolis was the Lumber Exchange Building. This 12-story edifice at the intersection of Hennepin Avenue and Fifth Street was a showcase for the area’s thriving lumber industry when it was completed in 1885.
For years, it housed accountants, insurers, law firms, and nonprofits. But like the Foshay, its occupancy has languished. This decline was highlighted by its most recent sale price of $1—a figure some wags have described as an overpayment for a “white elephant” with a brownish exterior. The current plan is to convert the 225,000-square-foot facility into a consumer-friendly hub emphasizing fashion, apparel, and creative enterprises.
Fifth Flounders
Another facility currently struggling is the 5th Street Towers, a pair of conjoined buildings on Fifth and Marquette. One tower comprises 26 stories (built in 1981), while the 36-story companion was completed a year later.
Together, they maintain a roughly 70% occupancy rate across 1.1 million square feet. However, the complex is experiencing significant financial woes and is currently on the market for an undetermined price. This represents a staggering reversal of fortune for a complex that, just six years ago, was given the TOBY Award (The Outstanding Building of the Year) by the Building Owners and Managers Association (BOMA).
Ameriprise Angst
Similar angst is being felt at the, a 31-story office tower on Third Avenue South. With its distinct glass and granite facade, it opened 26 years ago this month across from the Government Center.
The building, purchased at a massive discount of $6.25 million last year, was slated to be sold to a Chicago-based developer for $22.26 million. However, the transaction fell apart when the purchaser allegedly missed earnest money payments. The default led the owner to sue in Hennepin County District Court earlier this month for $650,000 in earnest money and legal fees.
A Tale of Two Cities
This quartet of financially challenged buildings has experienced great successes and setbacks in the past. Their current peaks and valleys recall the opening passage of Charles Dickens’ 1859 classic, A Tale of Two Cities: “It was the best of times, it was the worst of times.”
The four Minneapolis towers are currently having a “dickens” of a time dealing with contemporary fiscal realities. As a consequence, it may be that none of them will emulate the Sousa march and last “forever.”
All of downtown office is girding for a value reset. Worth $1Billion in 2020, the office market is now collectively worth half of that in 2026. Most of the newer product cannot be converted to hotel or residential given the floor plate size and design. Our “student” council run by socialist majority dies not yet grasp the significance but by 2028 they will have to reduce socialist handouts to their renter majority constituents or city services for lack of tax revenue. The corresponding shift of burden to single family home owners will not be sustainable.
Among the creditors was John Philip Sousa, who did not get paid by Foshay for composing & conducting his “Foshay Tower Washington Memorial Marc” (https://www.youtube.com/watch?v=BHign4MGCR8). So he never performed it again, ad did not even publish the music so anyone else could perform it. Not until 1988, when a group of Minneapolis investors paid the Sousa Estate the $20,000 fee, was it ever performed again.
Many local residents judge the economic health of downtown by the first floor occupants – retail and restaurant businesses. However, Paul Levy and the Center City District in Philadelphia (the business improvement district which has served as a model for many BIDs, including Minneapolis) conducted a study some years ago and found that office workers make about double the wages as retail and restaurant employees. This suggests that the Minneapolis Downtown Council should concentrate its attraction strategy on office tenants. While many downtowns are struggling to convert office towers to residential uses, these are often costly conversions; and despite the impact of AI and teleworking, filling exiting office space with new enterprises may ,are more sense.