Jon Hempel, Hempel Properties,
on developing his company’s first hotel
Jon Hempel was remarkably calm this spring as he toured Hempel Properties’ largest project to date: the renovation of the old Midland Bank into The Hotel Minneapolis at Fourth Street and Second Avenue, scheduled to open in August under the Hilton Doubletree brand. Hempel headquarters will also move to downtown Minneapolis to be close to the joint venture that will redefine his eight-year-old firm, known so far for retail and office projects. He says he’s not worried that other hotel projects are going up downtown alongside his. He betrays his excitement just a bit when he shows off the hotel’s grand features, new and old.
It’s a 100-year-old building. It’s laid out fantastic for a hotel. It has great bones. You couldn’t build it today, for the cost of the materials and labor.
It was a bank building, built in 1905, that then became the Midland Bank. It’s been office space for years.
I passed on the building the first time I came to look at it. At first I thought, I really don’t want to own a Class C office building. The owner said, come back and look at it for condos. I looked again and I thought “hotel,” so we brought in an architect. That was over two years ago.
Here we’ll have a way cool red material, and birch trees, and here is the lounge area. We’ll have very cool music here. There will be two entrances, and we call this our promenade. We’ll have big, oversize light fixtures. Here is our breakfast/lobby bar area. That’s a Hilton requirement.
These are fluted marble columns. The coppered ceiling is incredible. The former owners, they had ugly ductwork, bad fixtures. It was pretty much uglied out.
It might have been obvious that it would function as a hotel, when we looked at it, but it took creativity of a great team to envision how to make it work. We?re leaving the physical bones and then infusing a soft, contemporary look.
The restaurant will be attached but a separate operation. We’re spending $28 million on construction; the total project cost is $60 million. We’ve secured all the financing. Morrissey Hospitality is our operating partner. We’ll own it and Morrissey will operate the hotel and restaurant. They operate the St. Paul Grill, Pazzaluna.
Here’s the cool bar we came up with. We tried to pull in some regional materials into the building. This is an old vault door. We chopped out a piece in the middle.
We wanted to create a nice sense of arrival. You’ll have this grand sense of arrival, a lot of energy and vibrant space.
It was complicated. It’s large scale. It’s going to have a huge impact on the downtown.
It’s created a lot of construction jobs, 300 to 400 construction workers through here, and of course employees in the hotel.
The riskiest project for us was the River Park condos in St. Paul. That opened over a year ago, right during the condo market changes. We?re doing fine there but it took longer than we expected.
We knew about all of these hotel projects in Minneapolis, going up at the same time. In our opinion these are meeting a pent-up demand. There will be a lot of moving around once this opens and the other hotels open.
We are delivering as nice a hotel as Minneapolis offers. We want to deliver affordable luxury.
We have the power of the Hilton reservation system. We looked at all the different brands available. We wanted the strength of Hilton/Doubletree.
I expected a lot of work, and I got it. We have a great team.
I’m excited about this room, a wine-tasting room. My grandmother used to work in this building during World War II, selling war bonds for Midland Bank. There’s a picture of a summer picnic at Lake Minnetonka, and she’s standing right by the bank president.
Restoring this building, that’s the project’s charm and character. That’s the charisma.
At Hempel, we want to develop properties where we can add value. Maybe they’re underperforming, maybe the owner lacks capital. We want a good asset in a good location, those are still real estate basics.
There are four types of real estate: opportunistic, the hotel would fall into that category, the riskiest. Then there?s value-add. Then there are stabilized products, called core. We’ll never buy in core. That’s for pension funds and those types of investors who just want an income stream.
We started the company eight years ago. I had worked at Cuningham, the local architecture and planning firm, and started a construction company there. While I was doing that I wanted to move it to develop our own projects. I went to work for a project management company. It was a good transition.
I love these huge windows, high ceilings; they’re 11 feet tall.
What’s it like being a hotelier? So far I like it. Of course we’re not open yet. My goal will be to help drive business to the hotel. We’ll be moving our offices down here, downtown.
This project gives us the resume and adds the experience in the hospitality sector. We have been in office and retail, and we’ll add industrial.
Do I lose sleep over the hotel? No, not really. It?s just another day.
-As told to Beth Ewen
[contact]
Jon Hempel is president of Hempel Properties in Maple Grove,
soon to move to Minneapolis: 763.383.1100;
jhempel@hempelproperties.com;
www.hempelproperties.com.
