Posted: 4:55 pm Thu, August 4, 2011


By Burl Gilyard
Tags: CB Richard Ellis, NorthMarq, Richard Ellis, Ted Leines

The Ramada Mall of America hotel in Bloomington along Interstate 494 is close to the Minneapolis-St. Paul International Airport. (Staff photo: Bill Klotz)

The Ramada Mall of America has a strong location in Bloomington: It’s close to the mall and the airport along Interstate 494. But the real estate has proved challenging.

The 48-year-old hotel is currently bank-owned and listed for sale at $15.5 million by a brokerage team with the local office of CB Richard Ellis. While the 255-room hotel is still operating, it is being marketed for redevelopment.

An entity controlled by the Mall of America’s owners paid $19.6 million for the hotel in December 2005. The move was seen as a way for the mall’s owners to control surrounding real estate with long-touted plans for a second phase.

But in July 2010, Kansas City-based Bank Midwest paid $15.75 million for the property. Hennepin County records show the deal as a sale, not a foreclosure.

A statement from the local office of CB Richard Ellis said the site “provides an ideal opportunity for a high-profile hotel or other redevelopment project.” The brokerage team of Richard Palmiter, Brian Pankratz and Larry Kaplan is marketing the property.

But some market observers see it as a tough sell in the current climate.

“I think it’s a great site, but for new development, that’s tough,” said Paul Wischermann, president of Minnetonka-based Wischermann Partners, a hospitality development and management consulting company.

“It’s just not the right timing,” Wischermann said. “It just unfortunately doesn’t coincide with a market for building new hotels. You can’t afford to build a full-service hotel right now.”

The Ramada was known for decades as the Thunderbird Motel, an iconic venue decorated with a host of Native American images and artifacts. In another era, the motel was close to both Metropolitan Stadium and the Met Center sports arena in Bloomington.

Construction is currently under way on the luxury 501-room Radisson Blu hotel on the southern side of the Mall of America. The $137.5 million project got a financing boost from $40.3 million in federal stimulus bonds.

Mall of America spokesman Dan Jasper said the Blu project is the first part of the expansion.

“Our plans are still to expand to the north … that’s going to be done in stages over a number of years,” Jasper said. “Our goal is still to build up to 5.6 million square feet on that property.”

The Ramada’s business address is 2300 American Blvd. E. The property’s main tax address is 2201 78^th St. E, but the site includes parcels at 2115 78^th St. E. and 2351 78^th St. E. The site totals 11.57 acres across the street from the planned second phase of the Mall of America.

A team with Bloomington-based NorthMarq previously had the Ramada property listed for $16.5 million. CB Richard Ellis began listing the property last month.

Ted Leines of Eden Prairie-based Leines Hotel Advisors said the land is worth more than the cash flow value of the hotel.

“Its value as a hotel is not there … it only has that value as a redevelopment site,” Leines said. “It’s been on the market for quite a while.”

Leines brokered the sale of the hotel in 2005. He recalled that the site drew interest for other potential uses, including a Lowe’s store and a car dealership.

“There was a lot of interest at that time from several other types of users, most of which could not get permitting from the city of Bloomington for what they wanted,” Leines said.

Zoning issues are another potential hurdle for redevelopment of the site.

“It’s zoned and guided for office or hotel uses, primarily,” said Glen Markegard, the acting planning and economic development manager for the city of Bloomington.

There are also height limits on the site, given its proximity to the north-south runway at the Minneapolis-St. Paul International Airport. Markegard said that on the far eastern side of the site, the maximum building height would be about 55 feet. On the far western side, the maximum height would be about 165 feet.

Markegard acknowledged that the city has had some inquiries but declined to identify or otherwise characterize the entities evaluating the Ramada site.

“We have parties doing due diligence,” Markegard said on Thursday.

John Johannson, a veteran retail broker with the local office of Colliers International, said that it has potential as a retail site but that the economics are challenging given the price.

“Maybe there’s a retailer out there who says, ‘I want to be near Mall of America.’ I think eventually something could work,” Johannson said. “It’s expensive … it’s a land play.”

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