Where The “In” Crowd Lives

In 2009, the owner of the former factory space at 730 Washington Avenue North in Minneapolis had no plans to sell his property—and likely little idea that it was slowly being circled like exposed prey. Locally based Greco, LLC had identified his building as a good redevelopment opportunity, but the firm knew that acquiring it would take care and precision, so it approached the owner multiple times over the course of a year and a half just to get him comfortable with the idea of letting his building go. Once he did, though, the firm was able to transform the space into ElseWarehouse, a 116-unit residential development completed in 2013. The project is emblematic of Greco’s dedication to proper location, choosing A-plus sites in revitalized neighborhoods—a strategy that reflects the firm’s status as not only a developer but also a property manager, catering to its clients well beyond the design phase.

Arnie Gregory, the company’s founder, CEO, and namesake, has been involved in the real estate industry since the early 1990s. It was in 2002, though, after applying for an RFP in Bloomington, a Minneapolis suburb, that he and his crew created Gregory Real Estate Company—for no other reason than to have an entity to work under. Not a fan of the spotlight, Gregory quickly shortened the company name to Greco, and then in 2007, the company’s property-management arm, Greco Properties, opened for business. Not only did this new arm allow the firm to control more of its expenses; it also gave the firm the opportunity to approach a new field with the same attention to detail and creativity that it had tackled development work with.

“We really focus on the best types of locations,” says Brent Rogers, Greco Development’s vice president and Greco Properties’ president. “The types of places where people want to live are the places that get the highest rents, and while they’re hard to find and can be expensive and hard to work with, they’re still the best.” This is why Greco, as a small company, chooses to work only on large-scale projects and only take on a couple of projects at a time, so it can concentrate its efforts and ensure quality.

Greco has, so far, focused primarily on two Minneapolis neighborhoods, both of which offer unique amenities that appeal to a wide range of clients. In Uptown, the firm has completed the Lime Apartments and the Flux Apartments, located approximately a half-mile apart from each other. An old railroad bed runs straight through the neighborhood from the Mississippi River to the western suburbs, and it has been transformed into an uninterrupted 5.7-mile bike and recreational path called the Midtown Greenway. Its convenient access to area lakes, bars, and restaurants was a big part of Greco’s decision to develop multifamily housing nearby.

Begun in 2006, the Lime Apartments development is Greco’s latest in the neighborhood. The firm had the space for a long time but felt that it was too small; however, next door was a VFW with a surface parking lot, so Greco approached its owners in order to buy the air rights to the lot. The firm built additional parking beneath and above the ground level, and thanks to that extra space, it was able to complete its adjacent 175,000-square-foot, 171-unit residential project in 2013.

Located about four miles away from the Uptown neighborhood is the North Loop, which contains Greco’s ElseWarehouse and the Copham historical-rehab projects, sited a mere two blocks from each other. The Copham, with 120 units, was completed in September 2012 and was 100 percent leased by the next month. ElseWarehouse opened in January 2013 and was fully leased by May. Both projects have large window openings, ceilings as high as 14 feet, and, most importantly, the sort of character that modern developers can no longer afford to build.

Gregory’s first experience with historical rehabs was in 1991, when he redeveloped an old downtown YMCA building. The project taught him about both the satisfaction of restoring beautiful period architecture and the financial perks of working on a rehab project. In particular, he learned how to raise equity in a new way using federal historic tax credits, and since then, the State of Minnesota has implemented the Minnesota Historical State Tax Credit, which actually makes rehab projects lucrative there. However, such properties are also difficult to find.

“The materials and the architecture that these historic buildings were constructed with back in the early 1900s, you could just never afford to build today,” Rogers says. “These buildings have great character, and because of how the economics work, it’s not like you can just put one up next door.” So, when Greco finds such a property that’s properly sized and that might actually be available, you can bet it does everything it can to add the building to its portfolio.

Because of the tax incentives that come with historical-rehab work, the ElseWarehouse and Copham projects are now able to offer rents that are 20–40 cents less per square foot than those of newly constructed apartments. This setup allows the old buildings, originally built for an entirely different use, to better compete with the space efficiencies of newer residences, and it encourages far more responsible land use.

“We like to revitalize neighborhoods rather than go out and buy a 10-acre piece in some suburb,” Gregory says. “We see the excitement in doing urban inner core because with that you have to be good at picking out locations. You can either be a winner or a loser.” Greco is committed to using local contractors and subcontractors as well—and in fact, through Gregory, it has worked with Hopkins, Minnesota-based FRANA Companies since the early 1990s, involving the builder throughout the design phase. By not putting its contracting needs up for repeated bidding, Greco may lose some money on the front end, but its experience and kinship with FRANA create a stronger, more unified vision between the two companies, which usually leads to a limited number of change orders.

Greco isn’t afraid to wait things out, and its foresight regarding renters’ desires to live in historic buildings or near popular area amenities such as the Midtown Greenway has led the firm to continued success, including at least a handful of record-breaking leasing periods. Greco’s patience and a commitment to planning may cost it more in the short-term, but these virtues have also led it to long-term profitability.

ELSEWAREHOUSE

Specs: 116 units, six floors
Accolades: on the local and national registries of historic buildings; named Best of 2013 by the Star Tribune
Highlights: exposed brick, solid aged-pine flooring, a six-story atrium, and a large rooftop deck

 

 

 

 

FLUX

Specs: 216 units, six floors
Accolades: named Top Project by Finance & Commerce; named Best in Real Estate by the Minneapolis/St. Paul Business Journal; won a Green Initiative Award from the Minnesota Multi Housing Association
Highlights: faces the Greenway; has an Internet café, a bar, a large outdoor pool with massage cabanas, a grill area, a dog park, and lawn bowling

 

 

 

THE COPHAM

Specs: 120 units, seven floors
Accolades: on the local and national registries of historic buildings
Highlights: mixed-use building; has a rooftop deck, underground parking, and an on-site restaurant

 

 

 

 

LIME APARTMENTS

Specs: 171 units, six floors
Highlights: a rooftop deck, a splash deck with a pool and a hot tub, a coffee and wine bar, and mood-driven spaces with sights and sounds that change from day to night